
Australian regulator questions Platinum's OfficeMax acquisition
Platinum Equity’s acquisition of OfficeMax in Australia and New Zealand – which came shortly after the GP agreed to buy the regional operations of Staples – has been flagged by Australian regulators due to concerns that it could lessen competition in the business products space.
“The ACCC’s primary concern is that the loss of competition between Staples and OfficeMax could result in higher prices and lower levels of service,” Roger Featherston, commissioner of the Australian Competition & Consumer Commission (ACCC), said in a statement. “We are considering the extent to which other competitors will have the ability to compete with a combined Staples/OfficeMax for large customers after the acquisition.”
The statement only represents a preliminary view. The ACCC has invited submissions from interested parties and expects to make a final decision in November. It is also assessing a rival bid for OfficeMax from Complete Office Supplies. Despite being the third-largest business products supplier in Australia and New Zealand, Complete Office Supplies is much smaller than Staples and OfficeMax.
Platinum announced it had agreed to buy OfficeMax’s regional assets from US-based Office Depot in April. The purchase of Staples was disclosed a month earlier. No details were provided regarding the size of either transaction.
OfficeMax was founded in 1988 in Florida and currently operates in North America, Europe, and Asia. The company entered Australia and New Zealand through its former parent company, Boise Cascade Office Products Corporation, which bought OfficeMax and took its name in 2003, passing the brand on to its operations in the two countries.
OfficeMax merged with Office Depot in 2013 in a $1.17 billion all-stock deal. Office Depot and OfficeMax continue to operate as separate brands in the US and overseas, though the Office Depot brand itself is not present in Australia or New Zealand. OfficeMax has 28 locations across both countries.
In 2015, the ACCC chose not to oppose a global merger of Staples and Office Depot – based on the industry dynamics at the time – but the deal failed to go through following legal action from the US Federal Trade Commission. As a result, the two companies decided to sell their international divisions and refocus on the core North American markets.
Office Depot recorded revenue of $11 billion for the 2016 financial year, down from 11.7 billion the previous year. Over the same period, pre-tax profit grew from $8 million to $529 million. However, the international division – including the Australia and New Zealand operations – reported a $150 million loss for the year, up from an $8 million loss the prior year.
Platinum claims to have more than $11 billion in assets under management and a portfolio of about 30 companies worldwide. The GP’s previous transactions in Australia include the purchase of Sensis, the directories business of the country’s biggest phone company Telstra Corporation.
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