WASHINGTON -- U.S. Office Products said the decision earlier
this month to spin off its corporate travel division will help
boost its profitability.
USOP plans to spin off four divisions, including its corporate
travel business, as part of an overall restructuring plan.
The office products supplier, whose corporate travel division is
now one of the five largest agencies in the U.S., said it was being
treated unfairly by Wall Street investors, who it said failed to
recognize the worth of its noncore businesses. "We keep being
pegged as a pure office-products play," said Ed Adams, president of
USOP's corporate travel division.
The travel division's annual revenue was $140 million, based on
annual travel volume of $1.4 billion. The value of USOP shares has
fallen in recent weeks. Company officials said investors have
unfairly valued the company based on the performance of rival
office-products companies.
The company held a conference call several weeks ago to explain
to analysts that its corporate travel, technology, school supplies
and printing businesses were profitable but were not being taken
into consideration.
Under the recently announced spinoff, the school supplies,
corporate travel, technology and print management divisions will be
split into separate, publicly traded companies. Adams said the
spinoff will enable the corporate travel division to accelerate
plans to consolidate recently acquired agencies into a cohesive
brand.
Adams will be chief executive of the new company, which will
operate under a new name and have headquarters in the Denver area.
The new company will continue its strategy of acquiring existing
travel agencies in the U.S. and abroad.
The company also will continue USOP's earlier strategy of
cross-selling to office-products customers and travel customers the
products of the other companies that are being split. Adams said
cross-distribution agreements will be signed to enable the
companies to continue to work together.
Adams said he believes there still are opportunities to be
profitable in corporate travel; however, he admitted his company
will be under more pressure than ever to prove it can make money in
the changing industry environment. "There are a tremendous amount
of corporate accounts out there that see value in what we bring,"
according to Adams. "We're going to be under a microscope going
forward."