Rona dismisses takeover talk
Quebec-based retailer responds to speculation after stock prices soar
Quebec-based home-improvement chain says it’s not up for sale, after interest from Lowe’s gives stock a big boost,
Rona Inc. is not for sale and does not believe that merging with another company would be in the best interests of the company or its stakeholders, according to a press release issued by the Quebec-based home-improvement retailer after markets closed Tuesday.
The release was issued after stock prices soared 12 per cent Tuesday, on comments made by Robert Hull, chief financial officer of the U.S.based Lowe’s Companies, Inc.
Hull called Rona “a very interesting company,” with many attractive qualities, including a footprint in Quebec, a market where Lowe’s has little presence at the moment.
“Rona affirms that it is not for sale,” the release said. Tuesday’s comments by Hull marked the second time Lowe’s has recently shown interest in expanding into Canada, according to analyst Keith Howlett of Desjardins Securities.
At a conference in the U.S. in early March, the head of international operations said Lowe’s was looking at ways to grow more rapidly and profitably here.
Lowe’s has 31big-box stores in Ontario, B.C., Alberta and Saskatchewan.
Rona is the largest Canadian distributor and retailer of hardware, home renovation and gardening products.
It operates a network of close to 800 corporate, franchise and affiliate stores of various sizes and formats under several banners, and a network of 14 hardware and construction-material distribution centres.
Howlett pointed out that any po- tential arrangement between Rona and Lowe’s would appear to be more probable prior to Rona implementing its recently announced
Comments by Lowe’s CEO mark second time U.S. firm has recently shown interest in expanding into Canada
strategic plan, which involves closing 10 big-box stores and reducing the size of 13 more, primarily in Ontario.
“We view it as positive for Rona’s shareholders that Lowe’s (with a market capitalization exceeding $37 billion U.S.) is open to discuss mutually beneficial commercial alternatives with the company. “Alternatives presumably may include joint venture, asset transactions or a distribution agreement (utilizing Rona’s supply chain in Canada). “Lowe’s interest offers the potential of an alternative value-creating option against which to assess the benefits of Rona’s current strategic plan.” National Bank Financial analyst Vishal Shreedhar put the chance of Lowe’s buying Rona in the next year at 25 per cent.