Office Depot Inc., parent company of Office Depot-Business Services (asi/287024), announced on Friday that it is selling its European business to German investment firm The Aurelius Group. Terms of the deal were not disclosed.
Headquartered in Boca Raton, FL, the second-largest office supplies retailer in the U.S. says it expects the deal to close before the end of the year. Office Depot estimates that its European business brings in 2 billion euros ($2.2 billion) a year in revenue, about 15% of the company’s total 2015 revenue of $14.5 billion.
The Aurelius Group says it buys and restructures companies and then resells them. Office Depot will have to pay 5 million euros ($5.62 million) to Aurelius if it doesn't exercise its option to sell after consultations within the prescribed time or if it fails to participate in the consultation process, according to a regulatory filing.
“The sale of our European business will allow us to streamline operations and focus our resources on markets that will provide the best opportunity to implement our recently announced three-year strategic plan,” said Roland Smith, chairman and chief executive officer for Office Depot.
The announcement comes about four months after a federal judge blocked a merger between Office Depot and Staples Inc., parent company of Top 40 distributor Staples Promotional Products (asi/120601). The judge said the deal, worth $6.3 billion, would reduce competition and raise prices, especially in the business-to-business office supply sector.
Following the failed merger, the company designed a strategic plan to increase profitability by reworking its retail model and driving growth in the B-to-B sector, among other initiatives.
Through the company’s Business Solutions Division, Office Depot sells promotional products and provides business services primarily to small and medium-sized businesses and the home office market.
Office Depot reported total sales of $3.2 billion for the second quarter of 2016, down 6% from the same quarter last year.