Investors cheered the news of Roland C. Smith being vested with the responsibility of spearheading the new Office Depot, Inc. (ODP - Analyst Report), a provider of office products and services. Shares of this Zacks Rank #3 (Hold) stock jumped 3.3% within a day of this announcement. The appointment of Smith as Chairman and Chief Executive Officer (CEO) came a week after official completion of the merger between Office Depot and OfficeMax.
Smith, who has vast experience in the retail sector, last served as the CEO and President of Delhaize America, the division of Delhaize Group, a supermarket chain. Prior to this, he served as President and CEO of The Wendy’s Company (WEN - Analyst Report); President and CEO of Wendy's/Arby's Group, Inc.; and CEO of Wendy's International, Inc.
Neil Austrian, Chairman and CEO of Office Depot and Ravi Saligram, President and CEO of OfficeMax, who collectively headed the new entity for a week, resigned from the company and board.
In February, OfficeMax and Office Depot decided to merge their businesses in order to better compete with the industry bellwether, Staples Inc. (SPLS - Analyst Report) and online rivals such as Amazon.com Inc. (AMZN - Analyst Report). The decision augurs well for both the companies, which have been grappling with soft sales due to tight business budget. Consumers and small businesses remain frugal about big-ticket spending on items such as business machines and other durable products.
The all-stock merger agreement, which involves 2.69 Office Depot shares for each share of OfficeMax, would result in cost synergies in the upper half of $400 million to $600 million by the end of the third year following the conclusion of the deal.
The new company with total revenue of about $17 billion for the 12 months ended Sep 28, 2013 has a headcount of approximately 66,000 employees globally, and offers service in 59 countries and operates over 2,200 retail outlets.