Office Depot and Office Max to join forces?
As the digital nature of business has threatened office supply stores, each has pivoted in its own unique way to compete, bringing on more technologies and devices to their offering, and office supplies are still a big dollar business. 2013 has been the year of collaboration with brands coming together to co-brand, but rumors point to Office Depot and Office Max potentially merging to compete not only with web giants like Amazon.com, but Staples, who does roughly $25 million in sales annually, according to Bloomberg, just over what the other two bring in combined.
“There have been rumors for a while about consolidation in the marketplace,” said a spokeswoman for OfficeMax. “It’s also been our policy not to comment on market rumors or speculation.”
“It is our long-standing policy that we do not comment on market rumors or speculation,” a spokeswoman for OfficeMax said in an email to WSJ.
More than a rumor
The Wall Street Journal broke the story that it is more than just a rumor, stating that the two are in serious talks about a merger, although no official offer or framework has been leaked as of yet.
Shares of Office Depot surged 28.32% to $5.89 before market open, and were still up over 10% around noon. OfficeMax, meanwhile, climbed 20% before the open to $12.90, and held that level through the early afternoon, reports MSN.
“The Federal Trade Commission would also have to give approval as well to make sure the newly formed company doesn’t breach any anti-trust regulations,” reports The Consumerist. “Because as is the case with mergers, when rivals combine consumers often suffer by way of less price competition.”
It is easy to see that with all of the online options for office supplies, a merger between Office Max and Office Depot isn’t exactly a monopoly, given that Staples still out-earns the two combined. Perhaps joining forces could change that, but we speculate the FTC will approve a merger should an agreement be reached.