Shares of ODP (NASDAQ: ODP) were plunging 14% at 11:13 a.m. ET today after the office supplies retailer announced that on second thought, it was going to keep its consumer retail business.
Best known as the owner of the Office Depot and OfficeMax chains, ODP had been planning to spin off the retail unit into a separately traded company, but then put the idea on hold earlier this year after receiving bids of as much as $1 billion for the unit.
This morning, though, ODP said its board of directors completed its strategic review and decided that after considering all the options, including proposals from potential buyers, it decided to hang on to the consumer business after all.
A little over a year ago, ODP announced it was thinking of breaking itself into two companies. One would be the consumer retail side, plus the online business; the other would be the business commerce side, including a B2B distribution outfit.
At the time, rival Staples had been pursuing a merger, something it does periodically over the years. Each time, it has been struck down by antitrust regulators, and ODP rebuffed Staples’ overtures for the same reason: It wouldn’t pass regulatory scrutiny.
Instead, ODP thought by breaking itself in two, it could enhance shareholder value. Then some offers started flowing in, giving investors hope they could realize even more value.
Today’s news dashed all of those hopes.
ODP’s decision rests heavily on the fact the market stinks right now.
Board chairman Joseph Vassalluzzo said, “Given current market and macroeconomic conditions, as well as the benefits of maintaining purchasing and supply chain synergies, the Board has determined that now is not the right time to further pursue separating the Company into two independent, publicly traded companies.”
He might be right, but it doesn’t make the sting any less for shareholders who were hoping for bigger things.