OfficeMax chief executive Ravi Saligram withdrew his name from the running as new CEO of the combined Office Depot-OfficeMax company, Saligram said in a letter to employees filed with securities regulators on Wednesday.
The action means the new CEO of the combined office-supply retailers likely will be an outsider.
Office Depot CEO Neil Austrian — who said early in the merger process he would only consider the new CEO job if another candidate couldn't be found — plans to retire, the company said.
"The CEO Selection Committee has recently begun to contemplate whether the combined company, in the context of a true merger of equals, would be better served by a new leader, with no ties to either company, who would bring a fresh perspective," he said in his note to OfficeMax's 2,000 employees in Illinois.
Rumored by analysts to be on the short list, Saligram confirmed in his letter that he was one of the finalists for the job. But some had doubts, pointing to OfficeMax's poor second quarter that ended in June. OfficeMax reported a loss of $10 million in the second quarter on lackluster sales. Last year, the Naperville-based office supply retailer earned $10.7 million in the same quarter a year ago.
Office Depot and OfficeMax, which agreed to a $1.2 billion all-stock deal to merger in February, said in August it had narrowed the list of new CEO candidates to five.
Besides a new CEO, still pending is the decision whether the new headquarters of the combined company will be in Boca Raton or elsewhere. That will be up to the new CEO with guidance from his board, the companies said. Some analysts said they expected the headquarters might be in Illinois if Saligram got the nod.
The merger, which the companies hope to close by year-end, is still going through review by the Federal Trade Commission. The FTC blocked Office Depot's proposed merger with Staples in 1997.
The office-supply retailers hope to combine into one $18 billion retailer to better compete with Staples as well as online and discount retailers.
Office Depot, which has 1,700 employees at its Boca Raton headquarters, leases a 645,000-square-foot office space in three buildings off Clint Moore Road and Military Trail. Company spokesman Brian Levine said the company has plenty of room for more employees.
OfficeMax also leases its office space in Illinois.
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