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.

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 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.