CLEVELAND Boise Cascade Corp. agrees to acquire OfficeMax

The future of OfficeMax's suburban Cleveland headquarters is up in the air.
CLEVELAND (AP) -- Boise Cascade Corp., despite a loss of over $27 million in the first quarter, has agreed to acquire OfficeMax Inc. in a cash and stock deal valued at $1.2 billion, the companies said.
Boise Cascade will purchase OfficeMax using 30 percent cash and 70 percent common stock. The cash amount could increase if the value of Boise Cascade shares drop.
The deal is designed for a return to OfficeMax shareholders of $9 per share, representing a 25 percent premium over OfficeMax's closing price Friday of $7.18 on the New York Stock Exchange.
Boise Cascade's common stock closed Friday on the NYSE at $23.43 per share.
A statement the companies issued today did not say whether OfficeMax will keep its identity or headquarters in suburban Cleveland, although Boise Cascade indicated it values the OfficeMax brand.
"Together, OfficeMax with Boise will be strategically and financially stronger and rival the size of its closest competitors," said Michael Feuer, OfficeMax's co-founder, chairman and chief executive.
Third largest
OfficeMax is the third largest office products retailer, behind Office Depot and Staples.
From a single store in suburban Cleveland 15 years ago, OfficeMax has grown to about 1,000 stores in the United States, Canada, Puerto Rico, the U.S. Virgin Islands and Mexico.
Boise Office Solutions, based in Itasca, Ill., primarily serves the larger institutional and corporate business segments.
"We are delighted and proud of our new proposed association with the OfficeMax organization," said George Harad, Boise's chairman and chief executive. "OfficeMax's proven retail expertise and powerful brand complement Boise Office Solutions' exceptional strength in the contract customer segment."
The combination grew from an initial contact OfficeMax made early this year, Feuer said.
Boards approved deal
Both companies' boards have approved the deal, which is subject to usual regulatory review and shareholders' voting. The companies expect a close by early winter.
The Boise, Idaho-based Boise Cascade in April reported a first-quarter loss of $27.5 million, or 53 cents per share, versus a loss of $6.6 million, or 17 cents per share, in the first quarter of 2002.
The loss occurred even though sales rose 4 percent to $1.85 billion in the quarter from $1.79 billion the prior year.
At the time the loss was reported, Harad said he was not sure when the company, best known for paper and building supplies, would fully rebound.
His comment was: "At this point, we see few signs of sustained recovery in our businesses."
Boise Cascade, which owns 2.3 million acres of timber in the United States, said in March it was cutting 700 jobs -- about 3 percent of its 24,000-member work force.
But there was positive news in the Boise Office Solutions group. Sales increased 6 percent to $938 million from $884 million.