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CASE STUDY: Office Depot, Inc.
Client
Founded in 1986 and headquartered in Southern Florida, Office Depot is an office supply industry leader in every distribution channel, from retail stores and contract delivery to catalogs and e-commerce. The company is the world’s number two online retailer; conducts business in 22 countries and employs nearly 50,000 people worldwide.
PJSC has represented Office Depot since 1990. At that time the company had revenues of approximately $900 million and a market capitalization of $775 million.
Assignment
To develop and assist in implementing a long term strategy to increase Office Depot’s presence in the United States and abroad. Considerations:
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In 1990, there were a number of office product superstore companies. Office Depot management and PJSC concluded that the office products industry would consolidate and Office Depot wanted to be a consolidator. After acquiring some lead regional stores to become a national chain, Office Depot acquired California based Office Club in 1991. |
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In 1993/94, management, stimulated by PJSC, concluded that the opportunity for office products superstores would diminish by the late 1990s. PJSC assisted management in moving into alternative areas of distribution, including the contract stationer business. |
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First, in 1994 and later in 1996, it became apparent that a merger with Staples, a principal competitor, would help rationalize the industry further and position the new company to compete with powerful retailers such as Wal-Mart. This strategic merger was blocked by the Federal Trade Commission. |
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In 1998, continuing to advance its strategic objectives, the Company concluded it was timely to expand its international presence. PJSC assisted the company in developing its blueprint for expansion abroad by acquiring Viking Office Products, a mail order business. |
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By 2002, Office Depot had become a leading internet seller. PJSC had assisted Office Depot in acquiring capacity to expand its product offerings through its purchase of 4Sure.com. |
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In 2003, to strengthen its European operations, Office Depot, through an introduction provided by PJSC, acquired French based Guilbert, SA. |
Accomplishments
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Expanded nationally and became an industry consolidator. |
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Used the Company’s market valuation and balance sheet to diversify business lines. |
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Tried to merge with a major competitor. |
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Mitigated the negative ramifications from a blocked merger. |
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Expanded into additional geographies and reinforced market position. |
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