After its proposed merger with Staples Inc. (Nasdaq: SPLS) failed to clear regulators, Office Depot Inc. (Nasdaq: ODP) hired Bain & Co. to review options for the business. The company officially terminated the Staples deal on May 16.
Boca Raton, Florida-based Office Depot is considering divesting its European business, making additional acquisitions, and increasing its presence in break room and cleaning supplies, according to CEO Roland Smith. “We are working to finalize our framework for growth and ensure that our capital structure is optimized to drive total shareholder return,” adds Smith, who was named Office Depot’s CEO in November 2014.
Office Depot was relying on the Staples merger to help revive declining sales. The company has been competing more with Amazon.com Inc. (Nasdaq: AMZN) and discount retailers, such as Wal-Mart Stores Inc. (NYSE: WMT). Office Depot’s sales dropped to around $14.5 billion in 2015 from $16.1 billion in 2014.
For Staples, the company is moving forward with an alternative strategy as well. The plan includes trying to win mid-market business customers, exploring alternatives for its European operations, cutting costs and returning cash to shareholders, according to Staples CEO Ron Sargent.
Office Depot acquired rival Office Max in 2013. Smith says the company is still integrating that deal. “The continued realization of synergies from the merger with OfficeMax has provided the company with a significantly improved financial profile including a strong liquidity position and the ability to generate future cash flow as merger related expenditures abate over time.”