Lowes buys Rona

0

On Feb. 3 U.S. home improvement giant Lowes announced that it had reached an agreement to purchase Rona Inc., the largest Canadian-owned home improvement retailer in the country.

Boards of directors of both firms have approved the deal, in which Lowes, headquartered in Mooresville, North Carolina will pay $3.2 billion dollars – double the share price – for Rona, which is based in Boucherville, Quebec. Rona shareholders must still vote in favour of the $24 per share offer at a special meeting prior to the end of March.

Lowes made a previous offer for Rona in 2012, which was rejected. At that time if offered $14.50 per share, or $1.8 billion dollars. With the Canadian dollar then worth a little more than its U.S. counterpart, the deal was valued at $1.86 billion U.S.

However, today’s low Canadian dollar has meant that buying Rona didn’t require Lowes to increase its offer as much as it would first seem. On the day of the announcement, with the Canadian dollar at O.73 cents U.S., the offer is worth $2.3 billion U.S., half a billion higher than the first offer, reported the Globe and Mail.

Lowes Canada will establish its head office at the former Rona headquarters in Boucherville, Que. with current Lowes Canada president Sylvain Prud’homme managing the combined operation.

The move substantially increases Lowes’ presence across Canada and particularly in Quebec, where it had no stores. Rona operates almost 500 corporate and independent affiliate dealer stores and nine distribution centres across Canada. It has more than 17,000 employees along with more than 5,000 employees in its independent affiliate dealers and generates annual sales of $4.1 billion.

Rona previously had a considerable presence in the plumbing and HVAC/R wholesale business after buying Noble, based in Concord, Ont., in 2007. However, it subsequently sold Noble to Emco Corporation, London, Ont., in 2013.

Share.

Leave A Reply