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Office Depot Gets $689 Million Bid for Stake in Mexico Unit

Feb. 21 (Bloomberg) -- Grupo Gigante SAB said it offered last week to buy half of Office Depot’s Mexico unit from Office Depot Inc., the office-supply chain that has come under pressure from activist investor Starboard Value LP to improve operations.

The Mexico City-based retailer, which already owns the other 50 percent of Office Depot de Mexico, offered to pay 8.78 billion pesos ($689 million) for the stake, according to a filing with the Mexican stock exchange.

The U.S. company has been exploring options since Starboard Value became its largest shareholder in September, with the fund’s Chief Executive Officer Jeffrey Smith writing in a letter at the time that “poor operating performance” has hurt the stock. Boca Raton, Florida-based Office Depot agreed to buy OfficeMax Inc. for $1.17 billion, according to a statement distributed yesterday.

Office Depot Chief Executive Officer Neil Austrian said in a conference call yesterday after the OfficeMax announcement that it had no plans “at this point” to sell Mexican assets.

“We are not planning to sell anything at this point within our portfolio,” he said.

Office Depot shares fell 4.8 percent to $3.98 today, trimming its advance to 21 percent this year. Gigante shares were unchanged today at 27 pesos.

Office Depot entered the joint venture in 1994, and the business has since expanded to more than 200 stores, according to regulatory filings. Office Depot de Mexico includes operations in Colombia and Central America.

To contact the reporters on this story: Jonathan Roeder in Mexico City at jroeder@bloomberg.net; Jonathan Levin in Mexico City at jlevin20@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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