In the News

Andrew Scott Quoted in Palm Beach Post Article on Office Max/Office Depot Merger

Says that Tax Incentives Will Likely Play Key Role in Where Soon-to-be-Merged Company Will Place its Headquarters

October 30, 2013

Andrew Scott, Chicago-based member in the Real Estate Practice Group whose practice focuses on various forms of economic development incentives—including tax increment financing, tax sharing and corporate tax credits—was quoted in an article, “Office Depot-Office Max merger appears imminent,” that appeared in the Palm Beach Post on October 25, 2013.

The article discusses several key questions—among them: who will be named CEO, where the headquarters will be located and what the name of this combined enterprise will be—each yet-to-be resolved in the planned (but not yet finalized)  merger of these two giant office supply retailers.

The article points out that Florida and Illinois—the two states which currently house the headquarters of Office Depot (Palm Beach, Florida) and Office Max (Naperville, Illinois)—are considering the use of various tax incentives to lure the soon-to-be-merged company to move its headquarters.

Office Max has a $20 million deal over 10 years from the state of Illinois; Office Depot  has a $15 million deal with the state of Florida. There’s a significant difference between the two arrangements: Illinois grants Office Max tax credits, while Florida’s arrangement with Office Depot uses tax refunds. Bottom line, Office Max has only cashed in $2.4 million in credits over the past eight years, while Office Depot nets as much as $650,000 each year.

In the article, Scott observes that Illinois has passed special legislation that monetizes tax credits, and might try to implement this technique to enhance the attractiveness of its deal. He notes that the importance of securing a Fortune 500 company to site its headquarters in a particular state cannot be underestimated.

Says Scott, “No politician wants a major corporate headquarters to get away on their watch.”