American home improvement giant Lowe’s is buying Canada’s Rona, the companies announced February 3, in a deal worth Cdn$3.2 billion (US$2.3 billion).
All acquired stores will continue to operate under the Rona brand. Lowe’s will purchase all of Rona’s common shares at Cdn$24 each and all preferred shares for Cdn$20 each, representing a premium of 104%.
“The transaction is expected to accelerate Lowe’s growth strategy by significantly expanding our presence in the Canadian market through the addition of Rona’s attractive business and excellent store locations across the country,” said Lowe’s president and CEO Robert Niblock.
“The transition also provides Lowe’s with entry into Quebec, where Rona is the market leader and we have no presence.”
The deal has been approved by both companies’ boards of directors. This is not the first play by Lowe’s to take over Rona; in 2012, a takeover bid was met with strong opposition by former Quebec Minister of Finance Raymond Bachand, according to the Teamsters, whose Local Union 1999 represents 2,000 Rona workers.
The Teamsters have expressed their concern about the deal, even though Lowe’s has said it plans to keep most jobs intact.
“Managers at Lowe’s need to know that we’ll be very vigilant regarding the more than 2,000 Teamster jobs at Rona,” said Local Union 1999 president Serge Bérubé. “Our team is currently doing a lot of fieldwork, answering as many questions as possible.
“There is no indication, at this stage, that this transaction will have an impact on Rona’s activities.”
Lowe’s Canada president Sylvain Prud’homme will lead the Canadian operations from Boucherville, Quebec, and the senior management teams of both chains will remain with the new company.
Lowe’s has 1,845 stores worldwide with 265,000 employees. In 2014, the chain had sales of US$56.2 billion. Rona has annual sales of Cdn$4.1 billion.
Rona has 15 corporate locations in the Lower Mainland. Across the country, the company has almost 500 locations including independent affiliate dealer stores and corporate stores. The Quebec-based chain has 22,000 employees in Canada.
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