Technology

Office Depot Buys CompuCom for $1 Billion

The acquisition of the IT support services firm is the "first step" in Office Depot's pivot away from traditional office products retailing.
Matthew HellerOctober 3, 2017

Office Depot has agreed to acquire CompuCom Systems for $1 billion, making a big move into IT support services as part of a “strategic transformation” driven by the decline of its traditional office products retail business.

Founded in 1987, CompuCom is a leader in systems integration, providing solutions to hundreds of blue chip customers, including six of the top 10 Fortune 500 companies, and many small- and medium-sized businesses, including local franchises of national brands.

Office Depot will acquire the company from private-equity firm Thomas H. Lee Partners, which will retain an 8% stake.

“Technology is the office supply of the future,” Office Depot CEO Gerry Smith said in a news release. “Today marks a significant milestone as we move to provide a unique business services platform for our current and future customers. Acquiring CompuCom is the first step in this new strategic direction.”

Like other office supply companies, Office Depot has been hit by the shift to online shopping and digital communications. Its attempt to arrest its sales decline by acquiring rival Staples fell through amid opposition from government antitrust enforcers.

The pivot to IT services follows the lead of Staples, which bought managed service provider Thrive Networks in 2007, and Best Buy, which purchased mindSHIFT in 2011.

“Together, Office Depot and CompuCom will be positioned to capture market share in a $25 billion, highly fragmented market as the first company to provide a nationwide, comprehensive network of enterprise-level tech services and products,” Office Depot said.

The company said CompuCom’s SMB-targeted Tech-Zone offering will be placed in Office Depot stores, noting that nearly six million SMBs are located within three miles of its approximately 1,400 stores.

The combined workforce will include about 6,000 technicians and Office Depot expects the deal will add about $1.1 billion in revenue.

“Together with Office Depot we can create a distinctive offering for our enterprise and SMB customers and accelerate our growth,” CompuCom CEO Dan Stone said. “The workplace has truly moved to a digital environment with the average worker having over four connected devices.”