Office Depot Inc , the No.2 U.S. office supply retailer, is in advanced talks to merge with smaller rival OfficeMax Inc and a deal could come as early as this week, a person familiar with the matter said on Monday.
Both companies, which trail industry leader Staples Inc , are under much pressure from investors to boost profitability as well as shareholder value, and a merger would help them to cut costs, close stores and boost their clout with suppliers.
The deal is expected to be structured as a stock-for-stock transaction, the person said, but the source also warned that the talks could still fall apart.
Office Depot has a market capitalization of $1.1 billion while OfficeMax has a market value of $932 million.
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