Office Depot, Inc. announced an agreement to sell its European business to investment firm The Aurelius Group.
The transaction is an equity sale, for nominal consideration, with Aurelius acquiring the European business with its assets and liabilities; annual revenue for Office Depot’s European business is some EUR 2 billion, accordion to a press release. Additional financial details were not disclosed.
The sale, expected to close by the end of the year, has been approved by Office Depot’s Board of Directors and is subject to regulatory approval from the European Commission and the central works council, which represents employees in France.
Office Depot continues to implement the strategic plan it finalized in the aftermath of its failed merger with rival Staples. The office supplies retailer's lame-duck CEO Roland Smith said in a statement that the sale of its European business will allow the company to focus on markets that provide the retailer its “best opportunity” to fulfill its ambitions.
Moody’s Investment Service retail analyst Charlie O’Shea concurs. “We view Office Depot’s announced sale of its European division as a credit positive as it removes a challenged facet of the company’s business, and will now allow it to focus 100% of its efforts on the remaining components, particularly North America, where it is facing an acutely-competitive operating environment,” O’Shea said in an emailed statement.
Even before its strategic plan was complete, Office Depot had said it was looking at strategic alternatives for its European business. At that time, Smith also announced his retirement, saying he would remain until a new chief is named sometime early next year.
Now those operations are in Aurelius’ hands. Since 2005 the investment firm has completed more than 70 transactions across Europe and specializes in investing in companies and corporate spinoffs, as well as complex divisional carve-outs from corporate entities, according to a press release.
Office Depot last month reported second quarter profit of $210 million, up from a loss of $58 million in the same period a year ago. The company also announced the completion of the first phase of a U.S. retail store optimization initiative launched in 2014, resulting in the closure of 400 stores, and said it is targeting approximately 300 additional store closures over the next three years.