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News Breaks | | | | February 27, 2013 | | 07:10 EDT |  | ODP, OMX | Starboard urges Office Depot to explore sale of Mexico joint venture interest
"On February 15, 2013, the Board received an offer from its joint venture partner, Grupo Gigante S.A.B. de C.V. ("Gigante"), to purchase the JV Interest for $690.5M. Given that Gigante's offer expires this Thursday, February 28, we believe the Board of Office Depot should promptly obtain consent from OfficeMax under the merger agreement to immediately explore a sale of the JV Interest to maximize value for shareholders. In our view, a sale of this asset at a full and fair price is clearly in the best interest of both Office Depot and OfficeMax shareholders. If the merger is completed, then both Office Depot and OfficeMax shareholders would benefit from the sale because the combined Company would have a significantly stronger balance sheet from which to transform the pro forma company and execute on any and all potential synergies. Similarly, if the merger is not completed for any reason, then Office Depot shareholders would benefit from the sale because the stand-alone Company would be financially stronger, having previously sold the asset. In our view, it is the Board's fiduciary duty to monetize the JV Interest given the clear benefit to both Office Depot and OfficeMax as a combined company and Office Depot as a stand-alone company. We believe OfficeMax should be fully supportive of the Board exercising its fiduciary duties. We recognize that OfficeMax is potentially conflicted as a sale of the JV Interest, while beneficial to the combined company, would also be beneficial to Office Depot as a stand-alone business and, therefore, may strengthen a competitor should the merger not be completed. If OfficeMax does not consent to Office Depot's negotiations with Gigante or any other potential buyer regarding the sale of the JV Interest, we would view this as both unreasonable and potentially anti-competitive." | |
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