US home improvement retailer Lowe's to buy Canada's Rona in a friendly $2.28-bn deal
04 Feb 2016
US home improvement retailer Lowe's Cos Inc has struck a friendly C$3.2 billion ($2.28 billion) deal to buy Canada's Rona Inc after it sweetened its more than three years back offer that was rejected by the company and Canadian lawmakers.
Lowe's, which withdrew its earlier C$1.8-billion offer for Rona in September 2012 (See: Lowe's withdraws $1.8 bn bid for Canadian home improvement retailer Rona), has now offered to pay C$24 per share, a premium of 104 per cent to the Rona stock's closing price on 2 February 2016.
The transaction has been unanimously approved by the boards of directors of Lowe's and Rona and is supported by the management teams of both companies.
Lowe's has identified over C$1 billion of opportunities to further increase revenue and operating profitability in Canada, the US company said in statement..
Lowe's has committed to retain the headquarters of the merged company in Boucherville, Quebec, and maintain Rona's multiple retail store banners.
In early August 2012, Quebec-based Rona had said that it had rejected a C$1.8 billion unsolicited takeover offer in July from Lowe's, the world's second-largest home improvement chain, saying that the deal was not in the best interests of its shareholders.
The government of Quebec had also criticised the takeover proposal, saying, "This transaction does not appear to be in the interests of either Quebec or Canada."
Some of Rona's dealers had even threatened to severe ties with Rona, if Lowe's went ahead with the takeover.
Rona's largest shareholder, Quebec public pension fund Caisse de dépôt et placement du Québec, holding about 17 per cent stake, yesterday said that it would tender its shares to the offer.
"We are very excited about this transaction as it leverages the strengths of two great companies, positioning us for continued success in Canada's over C$45-billion and growing home improvement industry," said Lowe's chairman, president and CEO Robert Niblock.
Toronto Stock Exchange-listed Rona is Canada's largest distributor and retailer of hardware, home renovation and gardening products with a 25 per cent market share.
The retailer operates a network of close to 800 corporate, franchise and affiliate stores under several banners, and a network of 14 hardware and construction materials distribution centres.
It is also a leader in the specialised plumbing and HVAC market, and has a network of nearly 60 sales outlets and four distribution centres across the country.
In total, Rona supplies nearly 1,500 sales outlets, of which some 840 are under one of its banners, as well as close to 600 clients, independent dealers, in its distribution network.
The company generated revenues of $4.1 billion in 2014.
Founded in 1946, Lowe's has grown from a small hardware store to the world's second-largest home improvement retailer behind Home Depot.
The North Carolina-based company serves around 16 million customers a week in the US, Canada and Mexico through its stores and online at Lowes.com, Lowes.ca and Lowes.com.mx.
Lowe's stores stock 40,000 products in 15 product categories ranging from appliances to tools, to paint, lumber and nursery products through more than 1,845 stores.
Lowe's, a Fortune 100 company, reported revenues of $56.2 billion in year ending 2015.
