Tuesday, July 15, 2003

Boise Cascade agrees to buy OfficeMax



By Joe Milicia
The Associated Press

CLEVELAND - Wall Street response was mixed to a proposed deal in which wood and paper products maker Boise Cascade Corp. would buy OfficeMax Inc. for nearly $1.2 billion in cash and stock.

OfficeMax shares rose $1.42, or 19.8 percent, to close at $8.60. Boise shares fell $1.56, or 6.7 percent, to close at $21.87 in trading Monday on the New York Stock Exchange.

Acquiring Cleveland-based OfficeMax, the third biggest U.S. office products retailer, would more than double the size of Boise Cascade's office products distribution business.

OfficeMax had fewer than half the sales last year of both Staples, the largest office retailer, and Office Depot, the second largest superstore chain.

"I think longer term the company is a more formidable competitor," said Colin McGranahan, research analyst for Bernstein.

Under the deal announced Monday, Boise Cascade will pay $9 a share for OfficeMax, a 25 percent premium over OfficeMax's closing price of $7.18 a share on Friday.

"If I'm a Boise shareholder, I'm not too crazy about it," said Mark Wilde, managing director at Deutsche Bank.

He said investors who bought Boise shares as a cyclical play in the paper business or for its asset value now have something else to consider.

"Can they combine with OfficeMax and make it work?" he said.

Boise Cascade plans to pay 30 percent of the price in cash and 70 percent in stock. The cash amount could increase if the value of Boise Cascade shares drop.

The deal already has been unanimously approved by both companies' boards and is subject to customary approvals under antitrust laws and by the shareholders of OfficeMax and Boise Cascade.

The companies hope to complete the deal by the end of the year.

"It's an excellent fit between complementary businesses," Boise chairman and chief executive officer George Harad said Monday in a conference call.

"This business combination gives the newly formulated organization the ability to better serve all channels of the office products market from home offices to small businesses to large corporations," said Michael Feuer, OfficeMax's co-founder, chairman and chief executive officer.

About half of Boise Cascade's $7.4 billion in revenues comes from selling office products.

Boise has been shedding jobs to cut costs and lost $27.5 million, or 53 cents a share, in the first quarter. Boise's stock has fallen 7 percent this year while shares of OfficeMax have gained 44 percent.

OfficeMax sells through nearly 1,000 superstores and via direct mail catalogs and the Internet. It had sales of $4.8 billion in 2002.

Boise Cascade is based in Boise, Idaho. Its office products distribution unit, based in Itasca, Ill., had $3.5 billion in sales last year.

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On the Net

Boise Cascade Corp.: http://www.bc.com

OfficeMax: http://www.officemax.com




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