Oct. 30 (Bloomberg) -- Office Depot Inc. approved an anti-takeover defense about six weeks after activist investor Starboard Value LP became its largest shareholder and started pushing for changes.
The second-largest U.S. office-supply chain passed a shareholder rights plan that would give its investors additional shares if one entity surpasses 15 percent ownership, according to a statement today. Starboard owned 14.8 percent of the Boca Raton, Florida-based retailer as of Oct. 12.
The so-called poison pill is designed to protect all stockholders “against potential acquirers who may seek to take advantage of the company and its stockholders through coercive and unfair tactics aimed at gaining control of the company without paying all stockholders a full and fair price,” according to the statement.
Starboard Chief Executive Officer Jeffrey Smith wrote in a letter to Office Depot CEO Neil Austrian on Sept. 17 that the retailer’s “poor operating performance” has hurt the shares. Office Depot should move to smaller stores and reduce the number of items it sells, he said. The chain also should cut general expenses and “significantly” lower advertising costs, Smith said.
The retailer, which has about 1,680 locations worldwide, has posted four straight years of falling sales and a net loss of $57.4 million last quarter. Office Depot, Staples Inc. and OfficeMax Inc. are facing more competition from online retailers such as Amazon.com Inc. while selling fewer traditional supplies as more workers use computers, tablets and smartphones.
Office Depot had gained 11 percent this year through Oct. 26, the last day of trading before markets closed as a result of Hurricane Sandy.
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