NEW YORK (CNNMoney) -- Office Depot announced a deal to buy smaller rival OfficeMax in an all-stock deal worth about $1.2 billion.
Details on the deal were limited. The companies said they expect to save $400 million to $600 million annually from the combination. But there were no estimates of staffing cuts or store closings.
The decision about what to call the combined company will be determined after a CEO is selected. The company will look at both current CEOs as well as outside candidates before deciding who will run the companies.
The announcement itself was a bit of an embarrassment and cast a negative light on Office Depot's operational controls.
First word of the deal came when Office Depot posted, apparently by mistake, a fourth quarter earnings statement which mentioned the deal on page 4 under "other matters."
That earnings statement was then removed from the company's investors relations Web site later in the morning.
Once the earnings statement disappeared the New York Times reported that the negotiations on the deal were still ongoing.
Then immediately after the market opened came the official joint announcement of the deal, which the companies described as a "merger of equals."
News of this type typically is announced before or after market trading hours, not immediately after the start of trading.
The deal is clearly an attempt for the two companies to compete with larger rival Staples.
Office Depot has 1,629 stores worldwide and 38,000 employees.
Office Max had 941 stores at the end of 2012, and 29,000 employees in 2011, the most recent year it has reported.
Staples operated 2,248 stores worldwide in 2011 and has 90,000 employees.
All the companies in this business have faced increased competition from online retailers such as Amazon.
According to Wednesday's release OfficeMax shareholders will 2.69 shares of Office Depot stock for each of their shares.
That is only about a 4% premium, based on Tuesday's closing stock prices.
But OfficeMax shares had closed up nearly 21% in Tuesday trading based on widespread reports of the deal.
Office Depot shares had closed up 9%.
OfficeMax shares were higher once again in early trading, while Office Depot shares were slightly lower, as were shares of Staples.
The combination would come as mergers and acquisitions have picked up.
Just last week, US Airways announced a merger with American Airlines parent AMR. Warren Buffett's Berkshire Hathaway announced it was buying Heinz.
And Comcast announced a $16.7 billion deal for the 49% of NBC Universal that was still owned byGeneral Electric.