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Boise to Acquire OfficeMax for $1.154 Billion

Tuesday, July 15, 2003

Press release from the issuing company

BOISE, Idaho, July 14 -- Boise Cascade Corporation announced today that it has reached a definitive agreement to acquire OfficeMax, Inc. for approximately $1.154 billion, or $9.00 per fully diluted share. The purchase price represents a 25% premium over the OfficeMax closing price on July 11, 2003. Boise will pay the purchase price in cash and common stock, using 30% cash and 70% common stock. Boise has the option of increasing the cash component to 45% and decreasing the stock component to 55%, at its discretion. This transaction has been unanimously approved by the boards of directors of both companies and is subject to approval by shareholders of both companies as well as regulatory authorities. Boise expects to complete the transaction in fourth quarter 2003. Commenting on the transaction, Boise's chairman and chief executive officer, George Harad, said: "Our acquisition of OfficeMax represents a major step in the transformation of Boise's office products distribution business and Boise as a whole. Together, OfficeMax and Boise will be strategically stronger and better able to deliver compelling value to office products customers through all channels and across all segments of the market. "At the same time, the size and impact of this transaction offer Boise the potential opportunity to enhance shareholder value by actively evaluating strategic alternatives for our paper and building products businesses. We have engaged Goldman, Sachs & Co. to assist us in developing and implementing these alternatives and expect to take appropriate steps over the 12 to 18 months following the close of the OfficeMax transaction." Christopher C. Milliken, division president and chief executive officer of Boise Office Solutions, said, "We are delighted and proud to welcome OfficeMax to our organization. Over the last year, under a strong management team, OfficeMax has led the industry in same-store sales growth, introduced new store formats, and improved productivity and margins in its operations. OfficeMax's proven retail expertise and powerful brand will fit well with Boise Office Solutions' exceptional strength in the contract customer segment." Michael Feuer, OfficeMax's co-founder, chairman, and chief executive officer, added, "Combining the strengths of OfficeMax and Boise Office Solutions will generate strategic synergies resulting in enhanced capabilities to better serve customers across all channels from small business to large corporations." Boise expects the transaction to contribute 15 cents to 30 cents, before integration costs, to earnings per share in 2004, and the contribution should increase in subsequent years. Including integration costs, the impact of the transaction on 2004 earnings should be approximately neutral. Boise expects synergy benefits to reach approximately $160 million when fully implemented. Synergies will come from purchasing leverage due to increased scale, logistics, marketing, paper sales, and administration. Under the terms of the agreement, all of the issued and outstanding shares of OfficeMax will be converted, at the election of the holder, into either cash or Boise stock with a value of $9.00 per share, subject to a collar mechanism. OfficeMax shareholders' election of cash or stock will be pro rated, to the extent necessary, so as to maintain the consideration mix selected by Boise prior to the shareholder election. The exchange ratio for OfficeMax shares to be converted into Boise stock will depend on Boise's stock price during an averaging period shortly prior to closing. If Boise's average stock price is between $21.09 and $25.77, the exchange ratio shall be adjusted to deliver Boise stock valued at $9.00 per share. If Boise's average stock price is at or above $25.77, the exchange ratio shall be 0.3492 Boise share per OfficeMax share. If Boise's average stock price is at or below $21.09, the exchange ratio shall be 0.4268. If Boise elects to increase the cash component, the value of the additional cash consideration will be equal to the value of the stock consideration replaced. Boise's election will not change the total consideration otherwise payable to OfficeMax shareholders. Boise has obtained committed financing from an affiliate of Goldman, Sachs & Co. to fund the cash portion of the consideration and to fund transaction costs.




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