ODP is the remnants of the Office Depot and OfficeMax merger a few years back. They operate retail stores selling office supplies and have a B2B business which distributes office, janitorial, etc. supplies to small and medium sized businesses. The company was on a path to separate into 2 publicly-traded companies but is evaluating offers for the retail segment prior to completing a spin-off.
- Offer on the table from Sycamore for retail business at $1bn
- Pending spin-off of retail business (Office Depot and OfficeMax stores) and B2B business
2017 — $5108m / $262m
2018 — $5282m / $243m
2019 — $5279m / $271m
2020 — $4683m / $116m
***Can this segment get back to 2017-2019 levels??
- ODP announced in January 2021 they would sell the CompuCom business only a few years after acquiring it for $1bn and on 12/31/2021, they announced CompuCom was being sold for $305m in a combination of cash, debt, and contingent consideration.
ODP Corporation (ODP) is a holding company that operates retail brands including Office Depot and OfficeMax, and provides business services and products through a B2B distribution platform. ODP is undergoing a corporate transformation that we expect will conclude over the next year, resulting in the separation of its retail and business solutions divisions. ODP has a strong cash position and an undemanding valuation and is in the process of buying back 20% of its shares by the middle of 2022. As the company is being broken up, we believe that a sum-of-the-parts analysis is appropriate. In June, Staples offered $1 billion in cash for ODP’s retail division, so we will use that. The remaining B2B business has better prospects and we believe that it deserves a higher multiple. We see $200 million of 2022 pro-forma EBITDA for this segment and by assigning a 7x multiple we arrive at $1.4 billion for this piece. Adding in $400 million of net cash and our estimate of $219 million of current value for its recently announced sale of CompuCom Systems (a technology support and services unit), brings us to just over $3 billion of total value. Using the last reported share count, this equates to about $55 per share.