Investment firm Atlas will pay $28 per share to buy ODP, which also owns ODP Business Solutions, representing a 34% premium to the company’s closing share price on September 19.
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ODP, which is headquartered in Boca Raton, Florida, had been exploring a sale with investment bank JPMorgan, sources said. Its board approved the transaction, which is expected to close by the end of the year after receiving approval from regulators and ODP shareholders.
“Atlas brings an understanding of our industry, along with the operational expertise, resources and track record of supporting its companies that will fast forward our B2B growth initiatives and strengthen our position as a trusted partner to our customers,” ODP’s CEO Gerry Smith said in an announcement.
Greenwich, Connecticut-based Atlas was founded in 2002 and owns 29 companies in the manufacturing and distribution sectors.
Investors called the deal positive, but surprising given a long history of unsuccessful tie-ups between ODP and peer Staples, owned by Sycamore Partners.
ODP and Staples, which supply pens, paper and other products to businesses and individuals, reached merger agreements in 1996 and 2015, but both attempts were blocked by the Federal Trade Commission, which said a combination would reduce competition in the market for office supplies sold to large business customers. Staples approached ODP again in 2021 with a $2.1 billion all-cash offer, but the company rejected the deal.
ODP had been under pressure from activist investment firm AREX Capital Partners and its market cap has fallen in recent years then as the company faced more competition from e-commerce companies like Amazon and Walmart, which also sell office supplies. ODP operates around 830 stores.
Reporting by Abigail Summerville in New York, Editing by Franklin Paul
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Abigail is on the M&A team and writes about consumer and retail deals. She joined Reuters in 2022 from Debtwire where she covered leveraged finance and the primary debt market for three years. Previously, her work has appeared in the Wall Street Journal, CNBC and the Boston Business Journal. She majored in business journalism at Washington and Lee University.
