Office Depot Calls Roll
Yesterday, The Options Insider Unusual Activity alerts noted that ODP July 8 calls rolled out to Jan at the same strike.
Paper sold 40,500 July 8 calls $.85 and bought 40,500 Jan 2016 calls on splits for $1.71 and $1.72. The 52-week range for ODP is 4.26 to 9.77.?
In February, it was announced that Office Depot Inc. shareholders will receive $7.25 in cash and 0.2188 of a share in Staples Inc. (SPLS) at closing. The transaction values Office Depot at $11 per share. The companies put the deal’s equity value at $6.3 billion. There is currently greater than a 17% merger-arb spread in the Office Depot share price. That represents a much larger than normal merger-arb spread, versus deals that are expected to close.
24/7 Wall St. recently warned that, despite getting shareholder approval by Office Depot holders, the Office Depot and Staples merger still has many hurdles to overcome.
There is still a large concern that these companies may face headwinds from antitrust regulators. Staples attempted to buy Office Depot in 1997 but regulators would not allow the purchase due to antitrust concerns. Will this be a repeat performance?