Office Depot's Acquisition by Atlas Holdings and Its Strategic Implications

The acquisition of The ODP Corporation by Atlas Holdings for $1 billion in an all-cash transaction represents a pivotal moment in the office supplies sector. Priced at $28 per share—a 34% premium to its closing stock price on September 19, 2025—this deal underscores Atlas Holdings' strategic focus on revitalizing traditional retail and distribution businesses through operational expertise and long-term value creationAtlas Holdings Acquires The ODP Corporation for $1 Billion^[1]. For shareholders, the immediate 30% pre-market stock price jump signals optimism, but the true test lies in post-merger execution and sector-specific challenges.

Strategic Rationale and Atlas Holdings' Track Record

Atlas Holdings, a private equity firm with a portfolio of 25–30 manufacturing and distribution businesses, has a proven history of transforming underperforming public companies into private enterprises. Since its founding in 2002, the firm has completed over 48 acquisitions, including its 2015 purchase of Tecumseh Products Co. for $123 million, which became a flagship example of its operational turnaround strategyAtlas Holdings Mergers and Acquisitions Summary | Mergr^[2]. The firm's approach typically involves injecting capital, streamlining operations, and leveraging industry-specific expertise to unlock value—a model that aligns with ODP's need for a strategic overhaul.

ODP, the parent company of Office Depot and OfficeMax, has faced declining sales and intense competition from e-commerce giants like Amazon and Walmart. In Q4 2024, its total sales fell 10% year-over-year to $1.6 billion, while Q1 2025 saw a 10% decline to $1.699 billion despite improved free cash flowODP Q1 2025 slides reveal improved performance trends as stock surges^[3]. The company's pivot to B2B services, though promising, has been hampered by macroeconomic headwinds, with its B2B segment reporting $852 million in sales for Q1 2025, down from $926 million in Q1 2024ODP Q1 2025 slides reveal improved performance trends as stock surges^[3]. By taking ODP private, Atlas Holdings aims to eliminate the pressures of public market expectations and refocus on long-term operational improvements.

Valuation Metrics and Industry Context

The $1 billion acquisition price corresponds to a 5.44 times EBITDA multipleOffice Depot parent to be acquired by Atlas Holdings for $1 billion^[4], which is below the industry average for distribution companies (6.4x–13x EBITDA in Q1 2025)Distribution Company EBITDA & Valuation Multiples – First Page Sage^[5]. This discount reflects ODP's recent financial struggles, including a negative net margin and a current ratio of 0.94ODP Corporation to Be Acquired by Atlas Holdings Affiliate^[6]. However, it also presents an opportunity for Atlas Holdings to enhance profitability through cost optimization and strategic restructuring. For context, Atlas Holdings' past acquisitions, such as Herff Jones and US Farathane, have historically shown EBITDA growth of 15–25% within three years post-acquisitionAtlas Holdings Mergers and Acquisitions Summary | Mergr^[2], suggesting a template for ODP's potential revival.

Shareholder Returns and Risk Factors

For ODP shareholders, the all-cash offer provides immediate liquidity and a 34% premium, which is a rare arbitrage opportunity in a sector marked by volatility. However, the success of the deal hinges on Atlas Holdings' ability to navigate regulatory hurdles and execute its operational plan. The firm's emphasis on B2B growth initiatives—such as expanding ODP's enterprise solutions and leveraging its distribution network—could mitigate retail sector headwindsAtlas Holdings Acquires The ODP Corporation for $1 Billion^[1]. Yet, risks remain, including the ongoing shift to e-commerce and the need to differentiate from competitors like Staples (which previously attempted a merger with ODP).

Conclusion

The acquisition of ODP by Atlas Holdings is a calculated bet on the office supplies sector's untapped potential. While the 5.44x EBITDA multiple reflects current challenges, Atlas's track record and operational playbook suggest a path to value creation. For investors, the key will be monitoring post-merger performance metrics, such as EBITDA growth and B2B revenue trends, to assess whether the firm can replicate its past successes. As the deal nears completion by year-end 2025, the market will be watching closely to see if this partnership can redefine ODP's trajectory in a competitive landscape.