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Office Depot strikes deal with biggest shareholder

BOCA RATON, Fla. (AP) -- Office Depot has reached a settlement with its biggest shareholder in a fight over the makeup of the company board as it opens its annual meeting Wednesday.

Three directors nominated by Starboard Value LP will be placed on the board. Office Depot directors Marsha Evans and Scott Hedrick will resign Thursday.

Office Depot is in the middle of a $1.2 billion merger with rival OfficeMax and executives have said Starboard's push to oust some of its board members would impede its search for a CEO to lead the company.

Evans was on the committee tasked with finding a new chief executive.

Starboard's candidate, Joseph Vassalluzzo, will replace Evans, the company said late Tuesday.

The other Starboard directors are Cynthia Jamison and Jeffrey Smith.

That means that the company board will grow by one seat and now consists of 11 directors.

"The resolution will allow us to continue our progress and momentum in our proposed merger with OfficeMax," Office Depot Chairman and CEO Neil Austrian said.

The announcement came hours after Office Depot said it had failed to strike a deal with Starboard over the board composition.

The company said Starboard had refused to settle and was urging shareholders to vote in favor of all 10 of its nominees at the annual meeting. Starboard, in turn, said Office Depot had painted a highly misleading and self-serving picture of settlement talks.

In announcing the agreement, Office Depot said Starboard has committed to supporting Office Depot's directors in elections at the annual meetings.

Shares of Office Depot Inc., based in Boca Raton, Fla., closed at $4.24 on Tuesday and have climbed 29 percent so far this year.