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Office supply companies OfficeMax Inc., based in Naperville, and Office Depot Inc. are in advanced talks to merge, the Wall Street Journal reported, citing people familiar with the matter.
The deal is expected to be a stock-for-stock transaction, the Wall Street Journal said on Monday, adding that the precise terms could not be learned.
The deal is not yet done, and talks could still fall apart, the Journal reported. An announcement could come as early as this week, the Journal added, citing the sources.
OfficeMax is expected to report its quarterly earnings on Thursday.
While the pair up had been rumored for years, one analyst said Monday that he believed a deal was less likely after a report last week that Office Depot is in talks to sell its remaining 50 percent stake in its Mexican operations.
Scott Tilghman, an analyst with investment firm B. Riley & Co. said that similarities in the pair’s U.S. and Mexican operations were thought to be a cornerstone of the consideration to combine.
But even if Office Depot does sell its Mexican stake, Tilghman said a deal would still make sense as both companies struggle to gain traction against competitor Staples Inc. and sites like Amazon.com.
By combining, the pair could cut costs by shedding stores and streamlining operations without having to raise prices. Tilghman estimates the companies could get rid of 20 percent of their combined stores and still hold onto customers.
- Samantha Bomkamp and Reuters contributed to this report
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Report: Merger near for OfficeMax, Office Depot
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Report: Merger near for OfficeMax, Office Depot
