Canada's Rona bows to investor pressure, shuffles board

Mon Jan 21, 2013 6:56pm EST
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By Euan Rocha

TORONTO (Reuters) - Rona Inc RON.TO named a new executive chairman and reshuffled its board on Monday as part of a deal with its top shareholders that will help the Canadian hardware retailer and distributor avoid a potentially bruising proxy battle.

The move comes just a few months after Rona, Canada's top distributor of hardware, home renovation and gardening products, rebuffed an unsolicited C$1.8 billion ($1.81 billion) takeover proposal from U.S.-based Lowe's Cos Inc (LOW.N: Quote).

It could signal a greater willingness to consider a sale of the company, which has performed poorly against Lowe's and Home Depot Inc (HD.N: Quote) on its home turf, analysts said.

"We view today's announcement as favorable to Rona's stock," said Barclays Capital analyst Jim Durran in a note. "The changes could result in more receptive dialogue regarding potential divestitures, or outright sale of the company."

The board changes are a precursor to bigger changes at the company, Robert Chevrier, the new executive chairman, said in an interview with Reuters.

Chevrier said the company plans to sell certain non-core assets and make some "drastic moves" to address the bleed at its big-box stores.

Rona's Toronto-listed shares, which have fallen almost 20 percent from a 52-week high of C$14.49, closed more than 3 percent higher at C$11.86 on Monday, following the reshuffle.