Office Depot Inc said on Wednesday that it had reached a deal to buy smaller rival OfficeMax Inc for $1.17 billion in stock to get more clout with suppliers and better compete against Staples Inc and Amazon.com Inc.

Office Depot will issue 2.69 new shares of common stock for each outstanding common share of OfficeMax. At Tuesday's closing prices, the deal is valued at $13.50 per share, or $1.17 billion, based on 86.7 million shares outstanding as of October 26.

After the merger is completed, Office Depot's board will consist of an equal number of directors chosen by that company and OfficeMax.

The news comes as both companies face pressure from investors to boost profitability and lift their sagging shares.

Underscoring how tough the office supplies business has become, Office Depot reported a net loss for the last quarter of 2012, hurt by 6 percent decrease in comparable sales at its North American stores and a drop in its unit that serves North American businesses.

Office supply retailers, which are often seen as reflective of overall economic health, have suffered as demand for their products fell in the years after the recent U.S. recession led companies to cut their spending.

They also face strong competition from the likes of Amazon and Wal-Mart Stores Inc in selling everything from pens and notebooks to furniture and break room supplies to government, businesses and individuals.

(Reporting by Phil Wahba; Additional reporting by Caroline Humer and Dhanya Skariachan; Editing by Lisa Von Ahn)