OfficeMax Worth $1.2B on Boise Cascade Paper

Discussion
Jul 15, 2003
George Anderson

By George Anderson


Boise Cascade, manufacturer of wood and paper products, has agreed to purchase OfficeMax for $1.2 billion in cash and stock, according to an Associated Press report. The companies are looking to close the deal by year’s end.


“Clearly, this gains us scale in office solutions,” said George Harad, chairman and chief executive officer. Boise Cascade. “It’s an excellent fit between complementary businesses.”


The deal for OfficeMax will more than double Boise Cascade’s business in office products. It will also put it in direct competition with Staples and Office Depot, the top two office supply retailers that are also distributors of Boise Cascade paper products.


Mark Wilde, managing director, Deutsche Bank, doesn’t believe the deal should cause executives at Staples or Office Depot to lose much sleep. “If you were in the retail business, how would you feel about a big paper company buying a company that was a little bit of an also ran? I don’t think that would make me particularly nervous if I was Staples or Office Depot.”


Moderator’s Comment: What is your reaction to the Boise
Cascade/OfficeMax deal?


We have to disagree with Mark Wilde. If I’m at Staples
or Office Depot, I can’t be too happy about a weak competitor being bought
by a company whose products are sold in my store.


Colin McGranahan, research analyst, Bernstein told the
AP, “I think longer term the company is a more formidable competitor.” There’s
no way we can see spinning that into happy news if I’m Staples or Office Deport.
[George
Anderson – Moderator
]

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