Rona has received and rejected a $1.76-billion unsolicited takeover offer from Lowe’s Companies, the second-largest home-improvement chain in the United States.
The Montreal-area company says the offer from its American rival wouldn’t be in its shareholders’ best interest and Rona will be looking at other options.
“The board believes that in the best interests of Rona and its stakeholders, the corporation should remain focused on executing its business plan with a view to capturing significant opportunities that it sees for its business,” Rona said in a statement.
But Lowe’s apparently is prepared to keep knocking at the Canadian company’s door, issuing a statement that says institutional fund managers controlling about 15% of Rona’s stock have expressed support for the offer.
By some definitions, Lowe’s public stance means it’s prepared to make a hostile takeover bid – one that goes around the board of directors and directly to shareholders, although Lowe’s says it would prefer a friendly deal.
“We are disappointed that Rona’s board of directors has rejected our friendly non-binding proposal, which is clearly attractive for Rona shareholders,” said Robert Niblock, the chairman, presdient and chief executive of Lowe’s.
“We believe a combination of Lowe’s and Rona makes enormous business sense. In addition, our proposal includes a number of important commitments to Rona that will benefit key stakeholders, including Rona’s dealer-owners, employees, suppliers, customers and local communities and would keep Rona’s headquarters in Boucherville, Quebec.”
Headquartered in Mooresville, N.C., Lowe’s is relatively small in Canada—with only about 16 stores and about 2,800 employees.
The first Canadian Lowe’s store was opened in 2007, several years after fellow American retailer Home Depot had a significant presence in Canada. Home Depot currently has 180 stores across Canada.
By contrast, Rona has more than 30,000 employees operating a network of nearly 800 stores under several banners as well as 14 hardware and construction distribution centres.
Rona says it received the offer on July 8 and told Lowe’s last week that it was rejecting the proposal.
Takeover rumours have circulated before but Rona only announced the approach from Lowe’s on Tuesday before stock markets opened.
