Starboard Value LP, the largest shareholder of Office Depot Inc. (ODP), Wednesday urged the office products retailer to explore the sale of a fifty-percent stake in its Mexican joint venture, office depot de mexico, to Grupo Gigante SAB de C.V.
Starboard, which owns a 14.8 percent stake in Office Depot, believes the significant value of the joint venture is not reflected in the stock price of the retailer.
Grupo Gigante, which owns the other half of the Mexican joint venture, recently offered to acquire the interest from Office Depot for $690.5 million. The offer expires Thursday. Office Depot entered into a joint venture with Grupo Gigante in 1994, with operations including Colombia and Central America.
Starboard urged Office Depot to immediately seek an approval from peer OfficeMax Inc.(OMX) for the sale of the joint venture interest. OfficeMax's consent is paramount, as per a recent $1.2 billion all-stock merger deal between the retailer and OfficeMax.
Starboard said it is the fiduciary duty of the Office Depot Board to monetize the interest in the joint venture given the clear benefit to both Office Depot and OfficeMax as a combined company and Office Depot as a stand-alone entity.
Starboard said it recognized that OfficeMax is potentially conflicted as a sale of the joint venture interest, while beneficial to the combined company, would also be beneficial to Office Depot as a stand-alone business and, therefore, may strengthen a competitor should the merger not fructify.
Starboard noted that if OfficeMax hinders a deal with Grupo Gigante or any other potential buyer for the sale of the joint venture interest, Starboard would view this as potentially anti-competitive.
Office Depot is trading at $4.02, up 0.75%, on a volume of over 2 million shares on the NYSE.
OfficeMax is trading at $11.82, up 0.51%.
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