Retail Group 3000, which operates the Toy Town chain, agreed Thursday to buy Office Depot’s Israel franchise and run it under a different name after reaching a deal with employees and trustees operating the office supplies retailer.
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Under the agreement, subject to approval by a court overseeing Office Depot’s bankruptcy, Retail 3000 will keep two-thirds of Office Depot’s employees on the payroll for at least 12 months, sources told TheMarker. Office Depot Israel’s 780 staff were due to receive pink slips on Thursday.
Office Depot has been operating in Israel for two decades, but in recent years sales have plummeted. Avi and Miran Malka, whose retail holding includes the Matim-Li chain, acquired the business in February in insolvency proceedings for NIS 42 million, but they failed to meet payments and lost control in October.
Ronen Levy, Retail 3000’s principal, was meeting with Office Depot’s landlords on Thursday to ensure that the outlets could continue operating at their current locations. But Retail 3000 is likely to keep only 20 of the franchise’s 31 stores open in the long term, said Keinan Maman, a partner in Retail 3000.
“Most of the property owners are willing to cooperate with us,” he told TheMarker. “In the first stage, we'll want to operate all the stores, but within a month we’ll have assessed which stores will remain open for the long run and which will be closed and replaced with smaller stores in less expensive locations.”
Retail 3000 plans to change the chain’s name after it failed to agree with Office Depot in the United States to pay reduced franchise fees. One of the new names under consideration is Super Depot, to give the chain some connection for customers with the global franchise.
Faced with the prospect of close to 800 layoffs, a number equivalent to what Teva Pharmaceutical Industries is planning in Israel, Finance Minister Yair Lapid and MK Avishay Braverman (Labor) have offered to help ensure financing for the takeover and continued operations, Maman said. Braverman is the chairman of the Knesset Economic Affairs Committee.
“At the moment we’re in talks with banks about loans in addition to the capital we’re putting up on our own,” Maman said. “The Finance Ministry has helped open doors at the banks and the National Insurance Institute to investigate whether NII will be able to pay salaries for one or two months, which we’ll pay back later.”