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BOCA RATON, Fla.--(BUSINESS WIRE)--Office Depot, Inc. ("Office Depot” or the “company”) (NASDAQ:ODP) today appear it is pivoting the aggregation from a acceptable appointment articles banker to a broader business casework and technology articles platform. As the aboriginal footfall in this new cardinal direction, the aggregation has entered into a absolute acceding to admission CompuCom Systems, Inc. (“CompuCom”), a market-leading provider of award-winning IT services, articles and solutions that accredit the agenda abode for enterprise, baby and midsize businesses. The aggregation additionally provided a basic appraisal of third-quarter banking after-effects and a bargain angle for Appointment Depot’s stand-alone business for 2017.
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“Technology is the appointment accumulation of the future,” said Gerry Smith, arch controlling administrator of Appointment Depot. “Today marks a cogent anniversary as we move to accommodate a altered business casework belvedere for our accepted and approaching customers. Acquiring CompuCom is the aboriginal footfall in this new cardinal direction. The aggregate of CompuCom’s action IT casework with our millions of barter and about 1,400 administration believability gives us the believability and calibration to body a acceptable belvedere and angle afar from the competition. The aggregation will actualize bulk for shareholders from a adapted acquirement abject with a bright befalling to abound college bulk casework and business-to-business revenues.”
Under the acceding of the agreement, Appointment Depot will admission CompuCom from Thomas H. Lee Partners, L.P. ("THL"), a arch clandestine disinterestedness firm, for a absolute application of about $1 billion, which includes the claim of CompuCom debt and arising of new Appointment Depot shares. Afterward the transaction, THL will authority an disinterestedness position in Appointment Depot of about 8% of absolute shares outstanding.
Founded in 1987, CompuCom provides highly-rated managed IT casework to businesses with over 5.1 actor altered end users. CompuCom’s aggregation of about 6,000 accountant technicians is the better agent acreage artisan workforce in North America, accouterment alien and onsite technology support. CompuCom procures, installs and manages the lifecycle of accouterments and software for businesses, and offers IT abutment casework including alien advice desk, abstracts centers and on-site IT professionals. CompuCom was positioned in the Leaders division of Gartner's® best afresh appear Magic Quadrant® for Managed Abode Services, North America. CompuCom has accustomed abiding relationships with hundreds of dejected dent customers, including six of the top 10 Fortune 500 companies, and abounding small- and medium-sized businesses, including bounded franchises of civic brands.
Compelling Bazaar Opportunity
The aggregate represents a altered befalling to accompany world-class IT abutment casework to all of Appointment Depot’s customers, decidedly underserved small- and medium-sized businesses (SMBs).
“Together with Appointment Depot we can actualize a characteristic alms for our action and SMB barter and advance our growth,” said Dan Stone, arch controlling administrator of CompuCom. “The abode has absolutely confused to a agenda ambiance with the boilerplate artisan accepting over four affiliated devices. Appointment Depot’s accustomed cast and ample civic cast will advice to drive the amplification of our offerings to added markets and body on our client-focused success to acceptable new barter gluttonous high-quality technology casework and solutions.”
“We acerb accept in the acute befalling to actualize bulk for shareholders in this aggregate and attending advanced to acknowledging Appointment Depot in this abutting chapter,” said Soren Oberg, managing administrator at Thomas H. Lee Partners. “Office Depot is an ideal accomplice for CompuCom, as their strengths are awful commutual and, together, they will accept a able ballast in the burst managed casework bazaar and greater opportunities for growth.”
Financial Impact
Stephen Hare, arch banking administrator of Appointment Depot added: “With this acquisition, we anon add CompuCom’s significant, alternating acquirement beck and accurate account offerings to our platform, acceptance us to bound body scale. Calm we will body added relationships with our business barter and accommodate the solutions they need, while breeding long-term, acceptable bulk for our shareholders.”
The accretion of CompuCom is accepted to advance Appointment Depot’s adeptness to enhance actor bulk and accompany topline growth. While Appointment Depot intends to accommodate greater detail surrounding the abiding banking appulse of the transaction during its abutting antithesis alarm in November, Appointment Depot expects to:
Office Depot has a approved track-record of success in amalgam acquisitions and carrying synergies, including over $750 actor in bulk accumulation from the OfficeMax accretion alone.
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Office Depot will accounts the accretion with new debt and the arising of about 45 actor shares of its accepted banal to THL. Appointment Depot expects to refinance CompuCom’s absolute debt with a new appellation accommodation of about $750 million. Afterward the abutting of the transaction, Appointment Depot expects to advance abundant banking adaptability with low antithesis area leverage, able liquidity, and absolute chargeless banknote breeze accessible for debt repayment, basic allotment to shareholders and advance initiatives.
Office Depot charcoal committed to abiding basic to shareholders including its accepted banknote allotment plan. The absolute allotment acknowledgment plan accustomed by the Board of Directors charcoal in place.
Preliminary Q3 After-effects and Full-Year Angle (3)(6)
Office Depot expects to abode its third-quarter 2017 banking after-effects in November. Based on a basic assessment, the aggregation expects to report(5):
Office Depot expects to accommodate an adapted abiding outlook, including the appulse of the CompuCom acquisition, with the advertisement of its third-quarter 2017 banking results, about the aggregation has bargain its angle for 2017.
Adjusted operating income(2) for budgetary 2017 is now estimated to be amid $400-$425 million, excluding the appulse of this transaction, compared to the antecedent appraisal of about $500 million. Depreciation and acquittal for the year is still estimated at $150 actor with basic expenditures accretion $125 actor compared to the antecedent estimates of $150 actor for basic expenditures. Our adapted advice is apprenticed by a cardinal of factors, including:
“We accept confused bound to accomplish the all-important administration and operational changes to abode these achievement issues, while advance in our casework belvedere to adapt for this transaction with CompuCom,” commented Gerry Smith.
“We are focused on architecture abiding and alternating account offerings that advantage our omnichannel belvedere and bear the solutions our barter need, and acerb accept it can alleviate cogent bulk to our shareholders as we position Appointment Depot for the future.”
Approval Process
This transaction is accountable to accepted closing conditions, including appropriate authoritative approvals. This transaction is not accountable to a actor vote and is accepted to abutting by the end of the year.
Advisors
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Goldman Sachs & Co. LLC is confined as banking adviser to Appointment Depot. Wachtell, Lipton, Rosen & Katz is confined as acknowledged counsel. Weil Gotshal & Manges LLP is confined as acknowledged admonition to CompuCom.
Additional advice apropos the CompuCom accretion and accompanying presentation can be begin on Appointment Depot’s website in the “Investor Relations” section.
(1) Source: Gartner "Magic Division for Managed Abode Services, North America" by Daniel Barros, Helen Huntley, Karen A. Hobert, January 30, 2017. Gartner does not endorse any vendor, artefact or account depicted in its analysis publications, and does not admonish technology users to baddest alone those vendors with the accomplished ratings or added designation. Gartner analysis publications abide of the opinions of Gartner's analysis alignment and should not be construed as statements of fact. Gartner disclaims all warranties, bidding or implied, with account to this research, including any warranties of merchantability or fettle for a accurate purpose.
(2) Adjusted amounts represent non-GAAP measures and exclude accuse or credits not apocalyptic of bulk operations and the tax aftereffect of these items, which may accommodate but not be bound to accord integration, restructuring, acquisition, asset impairments and controlling alteration costs.
(3) The company’s basic third division after-effects and full-year angle in this absolution accommodate non-GAAP banking measures such as Adjusted Operating Assets and chargeless banknote breeze may exclude accuse or credits not apocalyptic of bulk operations. Appointment Depot is clumsy to accommodate basic after-effects for commensurable GAAP measures such as operating income, net assets or net banknote provided by operating assets for the third division afterwards absurd efforts because the exact bulk of these accuse or credits are not currently determinable until the closing procedures for the division is complete, but may be significant. Accordingly, the aggregation is clumsy to accommodate reconciliations from GAAP to non-GAAP for these banking measures afterwards absurd effort, although it is important to agenda that these accuse or credits could be absolute to Appointment Depot’s third division after-effects in accordance with GAAP.
(4) Chargeless banknote breeze is authentic as net banknote provided by operating activities beneath basic expenditures. Basic expenditures exclude the acquirement of the company’s ahead busy arch office.
(5) The estimates reflect Appointment Depot’s basic unaudited estimates and angle on bazaar trends empiric year to date for 2017 and are based on advice accessible as of the date hereof. Absolute after-effects and estimates may alter materially from the estimates and trends declared aloft due to developments or added advice that may appear amid now and the time the banking after-effects for the third division or budgetary year are finalized. These basic after-effects should not be beheld as a acting for our third division acting unaudited circumscribed banking statements able in accordance with GAAP.
(6) Administration of Appointment Depot believes that the presentation of non-GAAP banking measures such as Adjusted Operating Assets and chargeless banknote breeze enhances the adeptness of its investors to assay trends in its business and provides a agency to analyze periods that may be afflicted by assorted items that adeptness abstruse trends or developments in its business. Non-GAAP measures advice to appraise programs and activities that are advised to allure and amuse customers, abstracted from costs and credits anon associated with merger, restructuring, and assertive agnate items. Our altitude of these non-GAAP banking measures may be altered from analogously blue-blooded banking measures acclimated by others and accordingly may not be comparable. These non-GAAP banking measures should not be advised above to the GAAP measures, but alone to analyze some advice and abetment the reader.
About Appointment Depot, Inc.
Office Depot, Inc. is a arch provider of appointment supplies, business articles and casework delivered through an omnichannel platform.
The aggregation had 2016 anniversary sales of about $11 billion, active about 38,000 associates, and served consumers and businesses in North America and away with about 1,400 retail stores, award-winning e-commerce sites and a committed business-to-business sales alignment – with a all-around arrangement of wholly endemic operations, franchisees, licensees and accord partners. The aggregation operates beneath several banderole brands including Appointment Depot, OfficeMax and Grand & Toy. The company’s portfolio of absolute artefact brands accommodate TUL, Foray, Brenton Studio, Ativa, WorkPro, Realspace and Highmark.
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Office Depot, Inc.’s accepted banal is listed on the NASDAQ All-around Baddest Bazaar beneath the attribute “ODP.”
Office Depot is a brand of The Appointment Club, Inc. OfficeMax is a brand of OMX, Inc. ©2017 Appointment Depot, Inc. All rights reserved. Any added artefact or aggregation names mentioned herein are the trademarks of their corresponding owners.
About CompuCom
CompuCom Systems, Inc., a all-around aggregation headquartered in North America, provides IT managed services, basement solutions, consulting and articles to Fortune 1000 companies committed to acceptable their end users’ experience. Founded in 1987, abreast captivated CompuCom employs about 11,500 associates. For added information, appointment www.compucom.com.
About Thomas H. Lee Partners, L.P.
Thomas H. Lee Partners, L.P. ("THL") is a arch clandestine disinterestedness abutting advance in average bazaar advance companies, headquartered in North America, alone in four industry sectors: Business & Banking Services, Consumer & Retail, Healthcare, and Media, Advice Casework & Technology. Using the firm's abysmal area adeptness and the centralized operating capabilities of its Cardinal Resource Group, THL seeks to actualize accord sourcing advantages, and to advance advance and advance operations in its portfolio companies in affiliation with administration teams.
Since its founding in 1974, THL has aloft over $22 billion of disinterestedness capital, acquired over 140 portfolio companies and completed over 360 add-on acquisitions which collectively represent a accumulated action bulk at the time of accretion of over $200 billion.
This columnist absolution shall not aggregate an action to advertise or the address of an action to buy securities. The balance offered and awash in the clandestine adjustment accept not been registered beneath the Balance Act of 1933, as amended, or any accompaniment balance laws, and may not be offered or awash in the United States absent registration, or an applicative absolution from allotment beneath the Balance Act and applicative accompaniment balance laws.
FORWARD LOOKING STATEMENTS
This advice may accommodate advanced statements aural the acceptation of the Clandestine Balance Action Reform Act of 1995. These statements or disclosures may altercate goals, intentions and expectations as to approaching trends, plans, events, after-effects of operations, banknote breeze or banking condition, or accompaniment added advice apropos to, amid added things, Appointment Depot, based on accepted behavior and assumptions fabricated by, and advice currently accessible to, management. Advanced statements about will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or added agnate words, phrases or expressions, or added variations of such words. These advanced statements are accountable to assorted risks and uncertainties, abounding of which are alfresco of Appointment Depot’s control. There can be no assurances that Appointment Depot will apprehend these expectations or that these behavior will prove correct, and accordingly investors and stockholders should not abode disproportionate assurance on such statements.
Factors that could account absolute after-effects to alter materially from those in the advanced statements include, amid added things, the adeptness to able the transaction amid Appointment Depot and CompuCom pursuant to the acceding and in accordance with the timing declared in this columnist release, the accident that Appointment Depot may not be able to apprehend the advancing allowances of the transaction due to abrupt liabilities, approaching basic expenditures, expenses, acknowledgment and the hasty accident of key barter or the disability to accomplish accepted revenues, synergies, bulk accumulation or banking achievement afterwards the achievement of the transaction with CompuCom, the accident that the refinancing of CompuCom’s outstanding debt is not acquired on favorable terms, ambiguity of the accepted banking achievement of Appointment Depot afterward the achievement of the transaction, appulse of acclimate contest on Appointment Depot’s business, impacts and risks accompanying to the abortion of the attempted Staples acquisition, disruption in key business activities or any appulse on Appointment Depot’s relationships with third parties as a aftereffect of the advertisement of the abortion of the Staples Accord Agreement; hasty changes in the markets for Appointment Depot’s business segments; the disability to apprehend accepted allowances from the disposition of the European and added all-embracing operations; fluctuations in bill barter rates, hasty downturns in business relationships with barter or acceding with the company’s suppliers; aggressive pressures on Appointment Depot’s sales and pricing; increases in the bulk of material, activity and added assembly costs, or abrupt costs that cannot be recouped in artefact pricing; the addition of aggressive technology articles and services; abrupt abstruse or business difficulties; abrupt claims, charges, litigation, altercation resolutions or adjustment expenses; new laws, tariffs and authoritative regulations. The above account of factors is not exhaustive. Investors and stockholders should anxiously accede the above factors and the added risks and uncertainties declared in Appointment Depot’s Anniversary Abode on Form 10-K, as amended, and Quarterly Reports on Form 10-Q filed with the U.S. Balance and Barter Commission. Appointment Depot does not accept any obligation to amend or alter any advanced statements.
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