OfficeMax investor says will support Office Depot merger

Benjamin Nahum of Neuberger Berman said his preference would be for OfficeMax to declare a special dividend before merging with Office Depot.

"In our view this would facilitate a fair deal," Nahum said.

A source familiar with the matter said on Monday that third-largest US office supply chain OfficeMax and larger rival Office Depot were in advanced talks to merge, and a deal could come as early as this week.

The talks are ongoing, but the source warned that they could still fall apart.

Currently, the deal is expected to be structured as a stock-for-stock transaction, the person said.

Office supply shops face the same problems as newspapers and bookstores, with people shopping more at online retailers such as Amazon.com or independent dealers. Industry analysts have long called for consolidation in the office supply sector as the key players fight a battle for relevance.

Neuberger Berman said OfficeMax shareholders should be compensated for "the balance-sheet strength that we bring to this combined entity".

The news came months after Neuberger Berman called on OfficeMax to return money to shareholders in the form of a dividend or share repurchases and raised the specter of a proxy fight if the retailer fails to comply.

Even Office Depot has been facing pressure from its largest shareholder, activist hedge fund Starboard Value LP, to take some drastic actions such as cutting expenses to improve

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