decor decor
"Great things are done when men and mountains meet."

-William Blake

Office Depot to Acquire CompuCom Systems

Financial Information*
  • Enterprise Value                                             ~$1B
Transaction Facts
  • Office Depot today announced it has entered into a definitive agreement to acquire IT managed services and outsourcing company CompuCom Systems Inc. for a total consideration of ~$1B. The transaction includes the repayment of CompuCom debt and issuance of new Office Depot shares.
  • The purchase is expected to close before year-end. Office Depot expects the acquisition to be accretive in the first year, and expects over $40M in estimated annual cost synergies within two years.
  • Following the transaction, private equity firm Thomas H Lee Partners (THL) will hold an equity position in Office Depot of ~8% of total shares outstanding.
  • In the same press release, the company lowered its outlook for 2017, expecting adjusted operating income to be between $400M- $425M, down from an estimate of $500M.
  • Shares of Office Depot fell 11% after hours.
Reinvention Through M&A
  • Huge Deal: Office Depot is officially shedding its role as a traditional office products retailer — now the combined company will be taking its first steps to capture market share in a $25B services and products market. Currently, CompuCom has the largest employee field technician workforce in North America, with ~6,000 licensed technicians, while Office Depot’s omnichannel platform offers access to nearly six million SMBs within three miles of its ~1,400 stores. The newly combined company’s nationwide, comprehensive reach in a highly fragmented services and products arena could position the company to be a market leader. 
  • Strategic Placement: In particular, the company will be targeting SMBs. CompuCom’s current SMB offering, Tech-Zone, will be placed within Office Depot’s nationwide retail stores, providing providing remote and onsite technology support. In addition, the company will focus on taking advantage of the minimal overlap between both sales teams while simultaneously developing an incentive structure focused on driving the more profitable services revenue stream. Office Depot expects an addition of ~$1.1B in revenue directly from CompuCom.
  • Multiple Transitions: CompuCom’s rather convoluted journey testifies of the multiple changes VARs often must go through to remain competitive in today’s landscape. Founded in 1987, formerly public CompuCom shrunk from a $2.7B company to a $1.5B company from late 1999 through the end of 2003. In June 2004, Platinum Equity bought the company for ~$254M in an all-cash, public-to-private deal. One month after acquiring CompuCom, Platinum acquired IT infrastructure solutions company GE IT Solutions and merged it into CompuCom. Under the new direction, CompuCom focused on cross-selling and upselling its hardware customers to software and vice versa, eventually resulting in more than half of its revenue coming from software and services. As its growing enterprise value became more attractive to investors, private equity firm Court Square Capital Partners purchased the company for $628M in July 2007, and THL acquired CompuCom for a reported $1.1B in April 2013.
For more information about this potential transaction, click here to read the press release.
*Financial Information from Bloomberg. 
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

16 Jul 2021

Platinum Equity Acquires Ingram Micro

*Financial Information ($USD) Enterprise Value:         $7.2 Billion EV/FY20 Revenue:      0.15x Transaction Details Platinum Equity announced that it has completed the acquisition of Ingram Micro Inc. from HNA Group. Ingram Micro’s total enterprise value in the transaction was $7.2 billion, including $5.9 billion in equity value Ingram will retain CEO Alain Monié and...

13 May 2021

NWN Corp. Acquires Carousel Industries

Financial Information ($USD) Not Disclosed Transaction Details NWN Corporation, a leading Cloud Communications Service Provider (CCSP), announced yesterday that it will acquire fellow solutions provider Carousel Industries. Financial terms of the deal were not disclosed. New State Capital Partners, majority stakeholder of NWN since 2015, is backing the transaction which will form a combined company...

13 May 2021

Softchoice Files for IPO

Announcement Details Softchoice Corporation, a leading technology solutions provider in North America, announced yesterday that it has filed a preliminary prospectus for an initial public offering. Softchoice’s common shares will be traded on the Toronto Stock Exchange, although the number of shares and price have not yet been disclosed. Before Toronto-based Softchoice was taken private in...