Key Highlights :

Atlas Holdings to acquire The ODP Corporation for $1 billion at $28 per share, a 34% premium on recent market value.

Transaction to take ODP private and is expected to close by the end of the year, pending approvals.

ODP has tough competition, falling market share, and pressure from activists.

Key Background :

The ODP Company has been a household name in the U.S. office supply market for decades through its Office Depot and OfficeMax store chains. In addition to its retail footprint, it also operates ODP Business Solutions, a B2B customer business unit. In spite of its size, ODP has faced growing pressure from structural headwinds in the retail space, including the proliferation of online marketplaces and changing consumer behaviors.

ODP has been behind the curve in addressing online competition, with e-commerce leaders like Walmart and Amazon rapidly expanding into office supplies and business services. Its roughly 830 stores have seen declining foot traffic, leading the company to emphasize business services and digital evolution in an attempt to remain relevant.

Over the years, ODP has tried to buy out rival Staples in a bid to consolidate the office supplies space. But 1996 and 2015 attempts were foiled by regulators on antitrust concerns, and a follow-up cash offer by Staples in 2021 was rebuffed by ODP's board. Those misses left ODP to fight its corner against increasing competition.

Atlas Holdings is a company that acquires and turns around firms with operational or financial problems. Having nearly 30 companies under its belt, Atlas has built up a history of long-term turnaround operations, primarily in industrial and distribution sectors. ODP is true to its model of revitalizing tried brands under duress.

The deal also comes in the context of rising activism by shareholder activists. Firms like AREX Capital Partners pressured ODP to explore strategic alternatives, a reflection of shareholder frustration with the company's performance and shrinking market capitalization. For most investors, Atlas's premium was a good and timely exit.

By going private with Atlas Holdings, ODP can be more effectively positioned to restructure operations, expand its B2B strategy, and reposition itself in a category where traditional office supply retailers are still under intense disruption.

About the Author

Ryan Parker

Ryan Parker is a Managing Editor at Business Minds Media.