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Pot Is Stirring At Office-Supply Chains

Boca Raton, Fla. – The moribund office-supply channel received a shot in the arm over separate reports regarding Office Depot and Staples.

The former has seen its share price rise over the past two days as activist investor Starboard Value upped its stake in the No. 2 office-supply chain to over 13 percent, making it the company’s largest shareholder.

Along with its new clout came a letter from Starboard’s CEO to Office Depot chief executive Neil Austrian, urging him to cut more costs; up its mix of profitable copy, print and other services; focus on small- and medium-sized businesses; and reduce the product assortment and downsize the stores, according to published reports.

Meanwhile, Fortune reported last week that several private-equity firms, including Bain Capital, may be in preliminary talks to acquire Staples. The news sent shares of the No. 1 office-supply chain sharply higher, and pulled up the stock prices of Office Depot and OfficeMax as well.

Investors likely saw in the reports signs that the logjam that is the office-supply sector may eventually be dislodged. Analysts have long lobbied for the merger of the weaker Max and Depot chains, while taking Staples private would allow it to revamp its operations away from the harsh glare of the public markets.