OfficeMax Inc. shares rose 9.3 percent to $15.69 in heavy trading Tuesday after a J.P. Morgan analyst said that the office supply company was ripe for a leveraged buyout.
The Naperville-based retailer is undervalued compared to its larger rivals Staples Inc. and Office Depot Inc., analyst Christopher Horvers said in the report. Even though OfficeMax is five years into a turnaround effort, there is still plenty of room left to restructure the business, he said. The report valued OfficeMax at $28 a share, citing the company’s cash pile along with a slew of expiring leases that would allow OfficeMax to move to higher traffic locations and open smaller, more productive stores.
Adding to the buyout allure: OfficeMax CEO Sam Duncan, who has led the current turnaround, is due to retire in February. Likewise, the pressure to consolidate the office supply retail industry means a private investor could sell the restructured company to rivals Staples or Office Depot, the report said.
OfficeMax officials declined to comment on the report, saying the company doesn’t comment on “rumor and speculation.”
In 1997, The federal government blocked a proposed merger between Staples and Office Depot — the first and second largest office supply retailers — on antitrust grounds.
