Office Depot Inc (NASDAQ: ODP) shares drooped Wednesday, after the company announced plans to acquire CompuCom for $1 billion.
The Boca Raton, Florida-based company said in a news release it was pivoting from a traditional office products retailer to a broader business services and technology products platform. CompuCom Systems is “a market-leading provider of award-winning IT services, products and solutions that enable the digital workplace for enterprise, small and midsize businesses.” The company also provided a preliminary estimate of third-quarter financial results and a lowered outlook for Office Depot’s stand-alone business for 2017.
“Technology is the office supply of the future,” said Gerry Smith, Office Depot CEO. “Today marks a significant milestone as we move to provide a unique business services platform for our current and future customers.
“The combination of CompuCom’s enterprise IT services with our millions of customers and approximately 1,400 distribution points gives us the credibility and scale to build a sustainable platform and stand apart from the competition. The company will create value for shareholders from a diversified revenue base with a clear opportunity to grow higher value services and business-to-business revenues.”
The release goes on to say the combination represents a unique opportunity to bring world-class IT support services to all of Office Depot’s customers, particularly underserved small- and medium-sized businesses.
Together, Office Depot and CompuCom will be positioned to capture market share in a $25-billion, highly fragmented market as the first company to provide a nationwide, comprehensive network of enterprise-level tech services and products.
Shares in Office Depot faded 70 cents, or 15.3%, early Wednesday afternoon to $3.89.
