News Feature | November 15, 2013

Office Depot Finalizes Merger, Appoints New CEO

By Anna Rose Welch, associate editor

Office Depot

Ronald Smith brings experience with business mergers and turnarounds to the table in new position at Office Depot

 

The newly minted Office Depot, product of the long-planned OfficeMax and Office Depot merger, announced that it has hired former Delhaize American and Wendy’s CEO, Ronald Smith, as the company’s new CEO. The $1.2 billion merger was finalized on November 5th.   OfficeMax CEO, Ravi Saligram and Office Depot CEO, Neil Austrian each assumed the position of co-CEO of the new company as the search committee evaluated over 100 qualified applicants. Upon Smith’s appointment one week following the merger, Saligram and Austrian resigned their posts.

Smith was a particularly appealing candidate for the position because of his reputation as a turnaround expert. According to the company, Smith comes to Office Depot “with a strong retail track record of increasing operation profit, managing complex integrations, directing corporate turnarounds, and transforming companies for future success.” Indeed, when Smith was named CEO of QSR chain Arby’s in 1994, the company tripled its operating profit and improved same-store sales from 1996-98. His other companies, AMF Bowling Worldwide and American Golf, both reported similar successes during Smith’s tenure as CEO.

Another alluring quality to Smith’s leadership is his previous experience overseeing the 2006 merger of Arby’s and Wendy’s. As is to be expected from any merger of two large companies, there will be lots of work ahead for Smith to get the newly formed company up and running smoothly. Following his appointment, Smith says, “Moving forward, my focus will be on fully integrating the two companies, achieving the planned synergies, creating a compelling vision for the future, and leveraging our infrastructure and assets to drive improved profitability and increased revenue.” One important issue immediately facing the company is where the headquarters will be located, as this will be key to “drive [the company’s] integration efforts” forward, Smith says.

This merger has been in the works for a while because of increasing competition from rival retailer, Staples, and online retailers. While the U.S. Federal Trade Commission shut down a proposed merger of Office Depot by Staples in 1997, its recent approval of this merger is a sign that the market for office supply retailers is changing. According to Juli Niemann, analyst with Smith Moore & Company, “We’re going to be seeing a lot of shotgun marriages right now, simply because they must survive. You’ve got weak profit margins, huge competition out in the industry, and way too many retailers out there.”

Now that the new Office Depot has found its CEO, things are already looking up. Shares of the Office Depot stock rose 3.3 percent within a day of the company’s announcement of Smith’s appointment. Similarly, the newly merged company stands to be a stronger, more competitive and efficient company in the market. Employing 66,000 associates worldwide, the company is located in 59 countries and has more than 2,200 retail stores. Combined revenue for the company for the 12 months ended September 28, 2013 totaled $17 billion. With this merger complete and turnaround expert Smith ready to begin his tenure as CEO, the company is optimistic about future growth.


See how Staples is cutting costs to be more competitive in the office supply space.


 

 

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