Arex Capital:Structural change needed to unlock ODP Corporation value

AREX Capital Management, together with its affiliates, a long-term shareholder of The ODP Corporation issued an open letter to the Company’s Board of Directors..That letter said in part : “We have… appreciated our open and candid dialogue with ODP’s Board and management team. As we have privately communicated to the Board recently, we believe that the results of the past few years strongly suggest that solid execution and ongoing share repurchases are insufficient to create meaningful and sustainable value for ODP shareholders. To that point, since January 2021, when Sycamore Partners made its unsolicited offer to acquire the Company, ODP’s shares are roughly flat. Incredibly, this disappointing performance has come against the backdrop of the Company reducing its share count by over 25% during this period…We are firm believers in ODP’s long-term prospects, and particularly in the valuable ODP Business Solutions and Veyer businesses. However, we are also sober about the enormous challenge that ODP’s current business mix presents for public market investors as the Company attempts to argue its way to a fair valuation. The steps that we have outlined should generate significant value for shareholders, far greater than what the Company is likely to deliver in any version of the status quo. No more time should be wasted exploring whether the 4-BU framework might ultimately resonate with investors or continuing a very expensive hope-based strategy with Varis. We feel that the Board must act decisively to unlock this value for shareholders, and if it does not, we will consider taking additional steps to hold the Board accountable and ensure that shareholder value is maximized.”