US-based Office Depot has signed a definitive merger agreement with OfficeMax to combine both companies in an all-stock merger.
The transaction will create a unified entity will revenues of $18bn and will be deemed a merger of equal structure wherein both entities will have equal representation and governance rights.
Benefits accruing out of the synergies achieved from the combined entity will also be disbursed proportionately.
OfficeMax shareholders stand to again 2.69 Office Depot common share for each of OfficeMax common share they currently hold to accomplish the merger.
"Customers will benefit from enhanced offerings across multiple distribution channels and geographies. The combined company will also have significantly improved financial strength and flexibility, with the ability to deliver long-term operating performance and improvements through its increased scale and significant synergy opportunities," said a statement released by Office Depot.
The all-stock merger was unanimously approved by the Board of Directors of both companies.
Commenting on the developments Office Depot chairman and CEO Neil Austrian highlighted the growth of internet in the past decade as the biggest factor to change the landscape of the office supplies industry.
"Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors, and increase stockholder value," outlined Austrian.
The combined company will have access to, on a pro forma basis, $1bn in cash surplus and $1bn in combined revolving credit facilities to further current business operations and invest in future prospects.
OfficeMax president and CEO Ravi Saligram concluded, "Together, we will have the opportunity to build on our strong digital platforms and to expand our multichannel capabilities to better serve our customers and to compete more effectively."