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Office Depot Takes Over OfficeMax to Take on Staples, Amazon (Update1)

Tickers in this article: AMZN COST ODP OMX SPLS WMT

(Includes statement announcing terms of deal, updates stock prices.)

NEW YORK ( TheStreet) -- Office Depot (ODP) said it would merge with competitor OfficeMax(OMX) in a press release , a move that may shore up the earnings of both companies and put them in closer running with Staples(SPLS) , the leading office supplier in the U.S.

Still, the status of the deal and its terms were in doubt for about an hour on Wednesday morning.

Office Depot removed the press release, which stated the terms of the merger at the end of a discussion of earnings. The New York Times reported the company prematurely put up the press release and was still finalizing the deal.

According to the release initially posted on Office Depot's Web site, the company will be acquiring competitor OfficeMax in an all-stock transaction that values OfficeMax at about $13.50 a share as of Tuesday's close.

OfficeMax stockholders will receive 2.69 Office Depot common shares for each OfficeMax share, the press release states. "Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors, and increase stockholder value," Neil Austrian, Office Depot's CEO, said in a statement.

On Tuesday, Deutsche Bank analyst Mike Baker said that while OfficeMax was the more likely acquirer given its size, an Office Depot acquisition of the company might create more value for investors.

"Although we think the more likely deal is OfficeMax buying Office Depot, if ODP were to buy OMX in an all-stock deal, it would be more accretive," Baker wrote in a client note that highlighted a possible 30-cent earnings-per-share boost for Office Depot, the healthier of the two companies financially.

A potential merger could help alleviate the operating struggles of big-box office retailers OfficeMax, Office Depot and Staples amid overexpansion and a change in the marketplace with the rise of smaller suppliers including W.B. Mason and new entrants as big as Wal-Mart(WMT) , Costco(COST) and Amazon(AMZN) .

"An Office Depot and OfficeMax combination would spur a rationalization of excessive office products retailing real estate and render the sector more capable of managing through a challenged product cycle and competing with new entrants such as Amazon.com," Brian Nagel, an analyst with Oppenheimer, wrote in a client note evaluating reports of the deal.

The proposed merger will bring the second- and third-biggest office suppliers together, creating a company with combined revenue of $18 billion, still below the $25 billion in sales that Staples reported in 2012.

The new company's board will consist of an equal number of directors designated by Office Depot and OfficeMax, according to the statement.

Shares of Office Depot and OfficeMax spiked in trading Tuesday on the reports of advanced merger talks . In trading Wednesday, Office Depot fell nearly 6% to $4.72, while OfficeMax recently climbed over 4%. Staples, which could be a beneficiary of a deal, rose nearly 3% after a 13% gain Tuesday