The Deal: Office Depot Settles Proxy Battle
NEW YORK (TheStreet) -- Office Depot
Boca Raton, Fla.-based Office Depot said that as part of the settlement Starboard nominees Cynthia Jamison, Jeffrey Smith and Joseph Vassalluzzo would join the board following its Wednesday annual meeting.
Office Depot will expand the board from 10 to 11 to accommodate the nominees, with current directors Marsha J. Evans and W. Scott Hedrick set to resign after the annual meeting concludes.
New York-based hedge fund Starboard, which owns about 14.6% of Office Depot, in April began the process of seeking a shareholder consent solicitation to restructure the Office Depot board. The fund said at the time that while it supports Office Depot's planned $1.2 billion merger with rival OfficeMax, it does not trust the Office Depot board to manage the company.
As part of the settlement, Office Depot has committed to appointing new director Vassalluzzo, the one-time vice chairman of office supply rival Staples Inc., to a board committee that will pick the CEO of a merged Office Depot and OfficeMax. Should the merger close as expected, Office Depot has pledged that both Smith and Vassalluzzo will continue as directors at the combined entity.
Starboard as a result has agreed to withdraw its proxy solicitation and has committed to vote its shares in support of Office Depot's nominees.
Smith, who is CEO of Starboard, said, "We look forward to working together with the Office Depot Board with the common goal of maximizing value for all shareholders through the OfficeMax transaction and the CEO selection process."
Neil Austrian, chairman and CEO of Office Depot, said the agreement will clear the way for the chain to focus on its business and the potential merger.
"The resolution will allow us to continue our progress and momentum in our proposed merger with OfficeMax," Austrian said. "Integration planning and the CEO search are already well underway and the merger is on track to close on or before year-end."