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U.S. Office Products splits
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January 13, 1998: 12:12 p.m. ET
Five separately traded companies created in comprehensive restructuring
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NEW YORK (CNNfn) - In a major restructuring, U.S. Office Products Co. on Tuesday said its board has unanimously approved a comprehensive plan that will result in five separately traded public companies.
The reorganization capped an aggressive growth strategy adopted by the Washington-based office supplies company. During the past 12 months, U.S. Office Products has spent about $800 million in cash and stock on various acquisitions including Mail Boxes Etc., the largest franchiser of business and postal centers.
"Today marks a new era for U.S. Office Products," said Thomas Morgan, president and chief executive of U.S. Office Products.
"This is consistent in our strategy in moving from an acquisition company to an operations company," Morgan told analysts on a conference call.
The plan will result in a newly formed U.S. Office Products and will also result in the spin-offs of the corporate travel, education, print management and technology solutions businesses into separate companies.
As part of the reorganization, the newly formed U.S. Office Products will receive a $270 million equity investment from a fund managed by Clayton Dubilier & Rice Inc.
The New York-based buyout firm, which on Monday announced plans to acquire North American Van Lines, will own a 24.9 percent stake but will have no ownership in the spinoff companies.
The plan involves a $1 billion self tender for approximately 37 million outstanding shares at a price of $27 per share.
U.S. Office Products also plans to take on $800 million of additional debt, bringing the total amount of indebtedness to about $1.3 billion.
The company said it expected the restructuring transactions to be completed in the second calendar quarter. The transactions are subject to a number of conditions including financing, regulatory and shareholder approvals and completion of due diligence by Clayton Dubilier & Rice.
The restructured U.S. Office Products will have revenue of $2.7 billion and consist of five of its current divisions: Office Supplies, Office Furniture, Office Coffee & Beverage Services, Mail Boxes Etc. and the New Zealand-based Blue Star Group.
The newly created corporate travel company will be the fifth largest travel agency in the United States. The education business, to be named School Specialty, will be the nation's leading provider of classroom materials. The print management outfit distributes, manufactures, and manages printing and related products and services for corporations. The technology solutions company provides turnkey technological help such as system platforms, networking, and software.
-- by staff writer Robert Liu
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