Office Depot to acquire OfficeMax in $1.2-billion stock deal Office Depot and OfficeMax have agreed to share the supply cabinet. Office Depot Inc. is buying smaller rival OfficeMax Inc. in what it's calling a "merger of equals," creating a heftier office-supply company to challenge industry leader Staples Inc. Amazon.com Inc. and other online vendors, as well as mega-chains such as Wal-Mart Stores Inc., Costco Wholesale Corp. and Target Corp., are encroaching on the office-supply market, which research group IBISWorld values at $21.2 billion. OfficeMax and Office Depot have suffered declining sales since the recession and are struggling to generate a 3% profit margin, compared with a margin of 8% or more at Staples, IBISWorld analyst Dale Schmidt said. "The hope is that the resultant company could cut redundant costs, raising its profit margin, while retaining a market share that will compete with Staples," Schmidt said. However, with the ever-increasing popularity of online sales and big-box retailers, the bricks-and-mortar chains of both Staples and the merged company will struggle to grow significantly. Both companies' boards unanimously approved the arrangement. The current chief executives - Neil Austrian of Office Depot and Ravi Saligram of OfficeMax - will keep their jobs until a new head is chosen. The companies haven't said what the combined operation will be called or where it will be based. Office Depot has its headquarters in Boca Raton, Fla., and OfficeMax is based in Naperville, Ill. The official announcement of the deal came Wednesday morning, several hours after Office Depot pulled a mistakenly posted version off its website. On Monday, the Wall Street Journal had reported that the two were negotiating a combination. The stocks of both companies swung higher as the market opened but fell during the day. Office Depot closed at $4.18, down 84 cents, or 17%, and OfficeMax ended the day at $12.09, off 91 cents, or 7%. Before the market opened, Office Depot reported a fourth-quarter loss of $17.5 million, or 6 cents a share, and OfficeMax posted a fourth-quarter loss of $33.9 million, or 39 cents a share. Office Depot has 38,000 employees and more than 1,600 stores worldwide. OfficeMax employs 29,000 people and operates about 900 stores in the U.S. and Mexico.