A hedge fund today renewed its call for OfficeMax Inc. to find a buyer, just 24 hours after the office supply retailer said it would cut costs by closing 110 of its 950 stores.
In a letter filed with the Securities and Exchange Commission, K Capital Partners LLC, which owns 6.4% of the Itasca, Ill.-based retailer, told management of the company that a sale will create more value to shareholders than any restructuring. The Boston-based hedge fund, which has been pushing for a sale of the company for at least a year, cited research by Goldman, Sachs & Co. that concluded a sale could fetch between $39 and $44 per share, and threatened to mount a challenge to the board should OfficeMax not follow its advice.
OfficeMax lost about $30.7 million during the first nine months of 2005 on sales of $6.7 billion as it engages in a brutal battle against larger rivals Staples Inc. and Office Depot Inc.
Even if OfficeMax did put itself on the block, there could be significant regulatory hurdles to a deal. In 1997, the Federal Trade Commission rejected a merger of Staples and Office Depot, saying that combining two of the nation’s three main office supply chains would be anticompetitive.—Lou Whiteman
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