Parent company of Office Depot is set to sell CompuCom unit for approximately $305 million
Home Depot Announces Strategic Transformation with Split and Sale of CompuCom Systems
Home Depot, the American home supplies retailer, has announced plans to split into two companies as part of a strategic transformation. The move, which is seen as the 'first step' in this transformation, aims to enhance the company's focus on its B2B assets and digital commerce platform, and maximize returns for shareholders.
The split signifies a shift from Home Depot's previous attempts to transform into a broad, diverse B2B services company. One company will house its business-to-business supply services, while the other will comprise of its retail banners.
The highlight of this strategic shift is the sale of Home Depot's CompuCom Systems IT unit to private equity firm Variant Equity for $305 million. This sale price for CompuCom to Variant is significantly less than the original acquisition price by Home Depot, which was approximately $1 billion in 2017.
The sale includes a mix of cash and an interest-bearing note. This transaction marks a significant milestone in Home Depot's strategic transformation and represents an important step in aligning the company's business model and resources towards its core strategy.
CompuCom, which provides IT services to businesses, has been under review by its parent company for over a year. During the pandemic, CompuCom's sales suffered, leading to this decision to sell the unit.
Home Depot's CEO, Gerry Smith, described technology as the 'office supply of the future'. This transformation aimed to change Home Depot from a traditional office products retailer to a broader business services and technology products platform.
In a related development, Staples, Home Depot's rival, has reiterated its interest in buying ODP's retail business for $1 billion. Staples has not given up on its pursuit of Home Depot, despite the strategic changes being implemented by the latter.
ODP Corp. expects to complete the spin-off process in the first half of this year. The split is intended to enhance the company's focus on its core strategy and maximize returns for shareholders. Anthony Scaglione, ODP's Chief Financial Officer, stated that the move enhances the company's focus on its B2B assets and digital commerce platform.
Variant Equity, the private equity firm that bought CompuCom Systems, was founded by Joshua Bekenstein during the period of the sale of CompuCom Systems to ODP Corp. This sale is seen as the 'first step' in a strategic transformation for Home Depot, signifying a shift from its previous attempts to transform into a broad, diverse B2B services company.
