Office Depot Inc. has reached an agreement to merge with smaller rival Office Max Inc. in a $2.3 billion transaction, after a slew of recent media reports claimed that the negotiations were ongoing.

The likelihood of the deal, which had been rumored for years, increased after a draft of a press release announcing the news was posted prematurely early in the morning of Feb. 20 on Office Depot's website. Both companies distributed a joint statement at about 9:30 a.m. EST saying that the two retailers had agreed to combine as a means to cut costs and improve financial strength.

A deal between Office Depot and Office Max is expected to bring about store closures, advertising cuts and more streamlined supply chains.

Office Depot will issue 2.69 new shares of common stock for each outstanding common share of OfficeMax. The deal is valued at $1.17 billion, or $13.50 per share as of Feb. 19 closing prices. The offer represents a premium of just under 4 percent to OfficeMax's $13 close.

The deal is expected to close by the end of 2013. Should that take place, Office Depot's board will consist of an equal number of directors chosen by that company and OfficeMax.

Whether or not the deal will spur any action from anti-trust authorities remains to be seen. Paul Denis and James Fishkin of law firm Dechert LLP in Washington D.C. are serving as antitrust legal counsel to OfficeMax, while J. P. Morgan Securities LLC served as exclusive financial adviser. Skadden, Arps Slate Meagher & Flom LLP is also providing legal counsel to OfficeMax. The Skadden team includes partners Margaret Brown, Cliff Gross, Matthew Kipp, Seth Jacobson, David Schwartz, Bruce Goldner and Meryl Chae.

Office Depot tapped investment banks Peter J. Solomon Co. LP and Morgan Stanley & Co. LLC as financial advisers, and Simpson Thacher & Bartlett LLP and Kirkland & Ellis to handle legal matters. The Kirkland team includes Neil Eggleston, Thomas Christopher and Michael Brueck.

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