Lowe's to Acquire Canadian Home Improvement Chain Rona
February 03 2016 - 7:50AM
Dow Jones News
Lowe's Cos. said it would acquire Canadian home improvement
chain Rona Inc. for about 3.2 billion Canadian dollars (US$2.3
billion) in a move to expand its operations in Canada.
Lowe's will pay about C$24 (US$17.15) for each outstanding
common share and C$20 for each outstanding preferred share of RONA.
The deal may include debt. The price represents a 104% premium over
Rona's closing common share price of C$11.77 on Tuesday.
Rona is a Canadian retailer and distributor of hardware, home
renovation products and building materials. The company operates a
network of close to 500 corporate and independent dealer stores
with nine distribution centers throughout Canada.
"The team at Lowe's has presented us with an excellent plan that
enables our company to maintain its brand power while at the same
time leveraging Lowe's global presence to build upon and expand our
reach," Rona's Chairman Robert Chevrier said.
Lowe's expanded Canadian operation, which would have had revenue
of C$5.6 billion in 2015, will be led by Sylvain Prud'homme,
current president of Lowe's Canada.
The deal will add to Lowe's earnings in the first year following
its close, the company said. Lowe's said it has identified over C$1
billion of ways to increase revenue and operating profitability in
Canada such as by using shared suppliers and expanding areas where
Lowe's has experience, such as appliances.
As part of the deal, Lowe's agreed to several stipulations
related to keeping jobs and operations in Canada including agreeing
to employ the "vast majority" of current employees and to base
Lowe's Canadian operations in Boucherville, Quebec.
Recently Lowe's has benefited from higher home values and more
people moving into new homes, which both spur spending on home
projects.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
February 03, 2016 07:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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