All three big office suppliers on the block

Parent company Wesfarmers is considering an IPO for Officeworks, which would put all three major office supply chains in Australia on the market at the same time.

Richard Goyder, managing director of Wesfarmers, announced the company's intention to float Officeworks in its half-yearly earnings report, but it will retain ownership if it doesn't get the money it's looking for.  "Since Wesfarmers acquired Officeworks in 2007, the business has successfully executed a turnaround plan, more than doubling its earnings and improving its return on capital from 5.7 per cent in the 2009 financial year to 13.9 per cent in the current period.  In light of its performance, options to monetise the value created for shareholders, including via an initial public offering, are being evaluated. The business will be retained if divestment options do not meet Wesfarmers’ valuation hurdles," Goyder said. Officeworks is a major print service provider, and last year awarded Konica Minolta with the contract to supply all of its front office equipment. More than 600 Konica Minolta machines are in use at Officeworks' 164 Australian stores, and Konica Minolta appointed Elizabeth Mitchell as its liaison to the office supply chain. The announcement follows news that OfficeMax is also destined to go under the hammer, as US parent company Office Depot looks to divest itself of all international operations in Australia, New Zealand, South Korea and mainland China. These businesses generate approximately $600 million in total annual sales and an operating loss. The Company is actively marketing these businesses for sale and expects to complete the process within the next 12 months, said a statement released by Office Depot in November. Staples Australia, the other member of the office supply 'big three' is up for sale as well, with the Australian Financial Review reporting in December that Staples had enlisted Morgan Stanley to examine strategic options for its Aussie arm - including a sell-off. AFR also revealed that Staples had sent a 'teaser document' to prospective buyers featuring its reworked management team and $35 million EBITDA.