Lowe's offers to buy Canada's Rona for C$1.8 billion
By Euan Rocha and Dhanya Skariachan
(Reuters) - Lowe's Cos Inc (LOW.N: Quote), the world's No. 2 home improvement chain, has offered to buy Rona Inc RON.TO for C$1.8 billion ($1.8 billion), but the struggling Canadian retailer said its own turnaround plan offered a better chance of success.
Rona, Canada's home-grown answer to Lowe's and Home Depot Inc HD.N, said the C$14.50 a share proposal was not the best deal for its shareholders. Smarting from years of disappointing sales, it wants to close some of its big box stores and focus on smaller outlets that it says its customers prefer.
The government of Quebec, Rona's home province, said the offer was not in the best interest of either Canada or Quebec and that it would examine how best to counter the proposal.
Lowe's said its plan has the support of institutional shareholders with about 15 percent of Rona's outstanding shares. Its July 8 proposal represents a 36.7 percent premium to the stock's closing price on Friday, July 6.
"We are disappointed that the Rona board said no," Doug Robinson, Lowe's head of international operations and development, told Reuters in an interview. "We really want to take a little bit of time to consider options."
At stake is both Rona's long history as an independent company deeply rooted in Quebec, and Lowe's attempt to kickstart its Canadian expansion by acquiring hundreds of stores and a national distribution network.
Rona's shares were up 18.9 percent at C$14.11 on Tuesday.
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