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Office Depot adopts shareholder rights plan

BOCA RATON, Fla. (AP) -- Office Depot Inc. said Tuesday that it has approved a poison pill measure.

The office supply retailer approved a rights agreement plan and will give each shareholder one preferred stock purchase right for each share of Office Depot that they hold. The purchase right allows them to buy a fraction of a share of Office Depot's preferred stock at $11.50. The rights agreement will expire Oct. 23 of 2013.

Poison pill measures are designed to prevent unwanted attempts to acquire or take control of a company by giving other shareholders the right to purchase more company stock at a discount, thereby diluting the shares held by the potential suitor and making it more costly to take over the company.

Office Depot said the rights it is issuing would be able to be exercised if someone buys up more than 15 percent of the company's stock without board approval.

The company faces some threat from activist investment firm Starboard Value LP. The New York firm believes the company's shares are undervalued and sent the company a letter in September outlining ways it wants to boost the company's profitability, including cutting expenses, product offerings and increasing higher margin services in North America. Starboard has a roughly 13 percent stake in the company.

Office Depot provides office supplies and services through 1,675 worldwide retail stores, a field sales force, catalogs and global e-commerce operations. Office Depot has annual sales of approximately $11.5 billion, employs about 39,000 associates and serves customers in 60 countries worldwide.

The company will likely provide more details next week when it reports its third-quarter results. The company was originally scheduled to report its results Tuesday but delayed its plans due to the impact of Hurricane Sandy.