The company has announced that it will be buying CompuCom for $1 billion (€0.84 billion) to enable it to provide business customers with new tech services.
According to a new article by Bloomberg, the office supply company, Office Depot Inc., will be purchasing CompuCom Systems Inc., for approximately $1 billion (€0.84 billion) in a move designed to “help the chain rebound from a punishing retail slump.”
This purchase will give Office Depot “a platform to sell tech services to business customers” and will give the retailer access to CompuCom’s workforce of approximately 6000 licensed technicians, which “provide software and hardware help to more than 5.1 million users”.
This move comes during a very troubled time for Office Depot, as the company “cut its forecast on Tuesday” and shares fell “by as much as 12 percent in late trading.”
CompuCom is being acquired from private equity investor, Thomas H. Lee Partners LP and the deal with Office Depot “includes repaying the takeover target’s debt and issuing new shares”; as a result, the equity investor will hold an 8% stake in Office Depot.
Office Depot “described the move as the first step toward becoming a seller of business services and technology, rather than a traditional retailer of paper, pens and staplers.”
Office Depot has been flailing in recent months, as a result of its proposed takeover by Staples Inc. falling through, halted by US regulators. The hurricanes that have been battering the US, and “a slow back-to-school period” have also had an impact on the company’s market standing, with Bloomberg declaring Office Depot “is in dire need of a jump-start.”
CEO of Office Depot, Gerry Smith, who transitioned there from Lenovo Group Ltd in February of this year, released a statement saying, “Technology is the office supply of the future,” and continuing, “Today marks a significant milestone.”
Now, with the acquisition of CompuCom, Office Depot expects “to start adding profits in its first year”, with the deal slated “to add about $1.1 billion in revenue and bring cost savings of $40 million within two years.”
Office Depot “also plans to gain synergy by selling CompuCom services to Office Depot customers”.
Goldman Sachs Group Inc. acted as financial adviser in the deal, while Wachtell, Lipton, Rosen and Katz acting as legal counsel. CompuCom received legal advice from Weil Gotshal & Manges LLP.