Rona franchisees rip Lowe’s bid
Independent merchants prefer current model
MONTREAL— Dozens of independent merchants who operate 164 Rona stores across Canada have written to the head of Lowe’s Companies, saying they are opposed to the U.S. retail giant’s $1.76-billion hostile takeover bid for the Quebec-based home improvement retailer.
The letter, made public Wednesday, says the independents prefer Rona’s approach of combining a network of independents with more than 200 corporate stores.
“We want to reinforce your view that it may not be a good idea for you to buy Rona after you appeared to state your doubts about the deal on Monday,” the letter reads.
“We respectfully say ‘No, thank you’ as we feel that Lowe’s business model is incompatible with the one with which we have individually chosen to engage.”
Lowe’s has approached Canada’s largest home improvement compa- ny with an informal offer of $14.50 per share but faces opposition from both Montreal-area Rona and the Quebec provincial government, currently campaigning towards a Sept. 4 vote. The chief executive of Lowe’s, Robert Niblock, told analysts Monday that a deal wasn’t “imminent” and Lowe’s was still evaluating its options. On Monday, Lowe’s posted a10 per cent drop in second-quarter net income, missing Wall Street’s expectations, as the home improvement retailer was hurt by the timing of revenues and a charge tied to job cuts. The Quebec government, which is examining ways to thwart the Lowe’s bid, has said the offer is not in the best interests of either the province or Canada. It says Rona has played a strategic role in creating tens of thousands of jobs through store employees, suppliers and manufacturers in the province and in the rest of Canada, including 50,000 in Quebec. The independent retailers echoed those concerns in their letter Wednesday.
“We have chosen to belong to a structure that enables us to place our trust in hundreds of local Canadian suppliers we know by their names, that invests heavily in professional development and that has ethics and the local community at its core,” they said. “We know what our customers want and believe that the Rona product offering reflects that as well as local values across the country.”