Mega Office Supply Mergers Can Effect Tax Write Offs for Small Businesses

The following news will ultimately effect millions of dollars spent on office supplies and written off each year in an effort to lower annual taxes, both by large corporations and small businesses  Office supplies is a reliabe write off which takes a small to medium size bite out of every business budget.

For that reason, marriages between mega companies can ultimately effect a small business owners bottom line.  When a company becomes one of the largest in the industry, they have the power to set prices, trends and ultimately our bottom line.  The article talks about several recent corporate merges and the effects the announcements had on investors.

Office Depot announced a deal to buy smaller rival OfficeMax in an all-stock deal worth about $1.2 billion.

By Chris Isidore @CNNMoney

Details on the deal were limited. The companies said they expect to save $400 million to $600 million annually from the combination. But there were no estimates of staffing cuts or store closings.

The decision about what to call the combined company will be determined after a CEO is selected. The company will look at both current CEOs as well as outside candidates before deciding who will run the companies.
                                        
The announcement itself was a bit of an embarrassment and cast a negative light on Office Depot's operational controls.
                                        
First word of the deal came when Office Depot posted, apparently by mistake, a fourth quarter earnings statement which mentioned the deal on page 4 under "other matters." That earnings statement was then removed from the company's investors relations Web site later in the morning. Once the earnings statement disappeared the New York Times reported that the negotiations on the deal were still ongoing. Then immediately after the market opened came the official joint announcement of the deal, which the companies described as a "merger of equals." News of this type typically is announced before or after market trading hours, not immediately after the start of trading.
The deal is clearly an attempt for the two companies to compete with larger rival Staples (SPLS, Fortune 500).
                                        
Office Depot (ODP, Fortune 500) has 1,629 stores worldwide and 38,000 employees.
                                        
Office Max (OMX, Fortune 500) had 941 stores at the end of 2012, and 29,000 employees in 2011, the most recent year it has reported.
                                        
Staples operated 2,248 stores worldwide in 2011 and has 90,000 employees.
                                        
All the companies in this business have faced increased competition from online retailers such as Amazon (AMZN, Fortune 500).
                                        
According to Wednesday's release OfficeMax shareholders will 2.69 shares of Office Depot stock for each of their shares. That is only about a 4% premium, based on Tuesday's closing stock prices. But OfficeMax shares had closed up nearly 21% in Tuesday trading based on widespread reports of the deal. Office Depot shares had closed up 9%.
                                        
OfficeMax shares were higher once again in early trading, while Office Depot shares were slightly lower, as were shares of Staples.
                                        
Related: M&A making a comeback

The combination would come as mergers and acquisitions have picked up.
                                        
Just last week, US Airways (LCC, Fortune 500) announced a merger with American Airlines parent AMR (AAMRQ, Fortune 500). Warren Buffett's Berkshire Hathaway (BRKA, Fortune 500) announced it was buying Heinz (HNZ, Fortune 500). And Comcast (CMCSA) announced a $16.7 billion deal for the 49% of NBC Universal that was still owned byGeneral Electric (GE, Fortune 500).