Starboard Value LP nominated six candidates for Office Depot Inc's board on Monday, saying it must be "significantly reconstituted now," whether or not the office products retailer merges with OfficeMax Inc .
"Office Depot cannot afford to wait to improve its operating performance," the New York-based investment adviser said in a letter dated Monday. Starboard is the company's largest shareholder, with a 14.8 percent stake.
Office Depot needs a new board to improve its operating performance on a stand-alone basis, oversee integration with OfficeMax if the deal is approved, and select a chief executive officer for the combined entity, Starboard said.
Shares of Office Depot were up 2.5 percent at $4.11 in morning trading, while OfficeMax gained 2 percent to $12.01.
Besides Starboard co-founder and CEO Jeffrey Smith, the nominees include Robert Nardelli, former CEO of Chrysler and Home Depot Inc ; David Siegel, CEO of Frontier Airlines; James Fogarty, CEO of Orchard Brands; Cynthia Jamison, a director of Tractor Supply Co ; and Joseph Vassalluzzo, a board member of a number of public companies.
If Office Depot does not immediately engage with Starboard to shake up the board, it should schedule its annual shareholder meeting for a date prior to the potential closing of the OfficeMax deal, Starboard said.
Office Depot said last month it planned to buy smaller rival OfficeMax in an all-stock deal worth $937.2 million as of Friday's market close.
Both companies face heightened competition from Amazon.com Inc and Wal-Mart Stores Inc in selling items ranging from pens and notebooks to furniture to customers including government, businesses and consumers.
(Reporting by Martinne Geller in New York; Editing by Gerald E. McCormick, Jeffrey Benkoe and Lisa Von Ahn)