Office Depot seeks to sell Mexican joint venture unit: report

Office Depot Inc, the second-largest provider of office products and services in the US, is in talks to sell its 50-per cent stake in its Mexican joint venture unit Office Depot de Mexico to its local partner Grupo Gigante SAB, Bloomberg yesterday reported, citing people familiar with the situation.

Grupo Gigante, which holds the other half of Office Depot de Mexico, is in talks with local banks for buying Office Depot's stake, which is estimated to be worth around $700 million, the report said.

Florida-based Office Depot entered into an equal joint venture in 1994 to form Office Depot de Mexico, which sells various office stationery products, equipment, related goods, and services through more than 200 stores, including in Colombia and Central America.

Till 29 September Office Depot de Mexico generated revenues of $860.8 million, of which Office Depot's share of earnings was about $24 million, according to Bloomberg.

Office Depot, which also has an Indian joint venture with Mukesh Ambani-led Reliance Retail, is selling its stake after its leading shareholder Starboard Value LP with nearly 15 per cent, pressurised it to improve earnings by cutting general expenses, lower advertising costs and move to smaller stores.

Office Depot provides products and services to its customers through over 1,650 retail stores in 60 countries. It has annual sales of approximately $14.5 billion, and employs about 42,000 people worldwide.

It has a market cap of $1.3 billion and reported net loss of $96 million in 2012 on revenues of $11.4 billion.