Office Depot (ODP) Ratings Placed on CreditWatch Positive by S&P (SPLS)

Standard & Poor’s Ratings Services today placed all its ratings on Boca Raton, Fla.-based office supplies retailer Office Depot Inc. (Nasdaq: ODP), including our ‘B-’ corporate credit rating, on CreditWatch with positive implications.

"The CreditWatch placement follows Framingham, Mass.-based Staples Inc.’s announcement that it has entered into an agreement to acquire all of the common shares of Office Depot Inc.," said credit analyst Andy Sookram. "Staples expects to fund the transaction with about $4.3 billion of new debt and $2.1 billion of equity. The transaction is subject to both Staples and Office Depot shareholder approval, as well as regulatory approval."

In our CreditWatch resolution we could equalize the ratings on Office Depot with Staples, assuming Office Depot merges into Staples, with Staples being the surviving entity and all Office Depot’s debt is assumed by Staples if not repaid at closing. We would then likely withdraw all of the ratings on Office Depot.

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