ODP Shares Lower After Board Elects to Retain Consumer Business

By Michael Dabaie

ODP Corp. shares fell 14% to $ 30.20 after the business services and supplies company said it won’t divest or separate its consumer business.

ODP’s board in January delayed an announced separation to evaluate a potential sale of its consumer business.

ODP said it completed a review of public and private non-binding proposals it received to buy its consumer business, which includes the Office Depot and OfficeMax retail stores business and its direct channel business, officedepot.com. The company’s board unanimously determined it would be in the best interests of the company and shareholders to not divest the consumer business at this time, ODP said.

ODP also said its board decided against resuming a potential public company separation, and would instead maintain all of its businesses under common ownership.

“Given current market and macroeconomic conditions, as well as the benefits of maintaining purchasing and supply chain synergies, the board has determined that now is not the right time to further pursue separating the company into two independent, publicly traded companies,” ODP’s Board Chairman Joseph Vassalluzzo said.

“However, the completion of our internal reorganization will make such a potential separation substantially simpler should the company determine to resume the separation process following a change of market conditions in the future,” Mr. Vassalluzzo said.

In May 2021, ODP’s board approved a plan to separate ODP into two independent, publicly-traded companies. The following November, USR Parent, the parent company of Staples, reaffirmed its non-binding proposal to acquire the consumer business. In December 2021, ODP’s board received a non-binding proposal from a third party to acquire the consumer business.

ODP said Tuesday that it recently completed realigning its operations under its holding company structure into its business-to-consumer business and three business-to-business business and digital segments. These include Office Depot LLC, ODP Business Solutions LLC, Veyer LLC, a supply chain, distribution, procurement and global sourcing operation, and Varis LLC, its B2B digital platform technology business.

“Our operating flexibility and balance sheet currently have us well positioned to continue delivering strong results against a macroeconomic backdrop that remains challenged by inflation and supply chain constraints,” Chief Financial Officer Anthony Scaglione said.

The company guided for second quarter revenue of about $ 2 billion and adjusted earnings before interest, taxes, depreciation, and amortization of $ 85 million to $ 90 million. The single analyst estimate on FactSet was $ 2.04 billion in sales.

The company said it expects 2022 results to be in-line with the previous year.

Write to Michael Dabaie at michael.dabaie@wsj.com

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