Lowe's wins over Canada's Rona with renewed takeover offer
By Amrutha Gayathri
(Reuters) - U.S. home improvement retailer Lowe's Cos Inc (LOW.N: Quote) agreed to buy Canada's Rona Inc RON.TO for C$3.2 billion ($2.28 billion), winning over Rona's board with a far higher offer than an unsolicited bid more than three years ago that was opposed by the company and Quebec politicians.
The deal will put Lowe's in a stronger position to compete with Home Depot Inc (HD.N: Quote) in Canada's more-than $30 billion home improvement market.
Lowe's, which withdrew a C$1.8 billion offer for Rona in September 2012, said on Wednesday it had made key commitments, including moving the headquarters of its Canadian business from Toronto to Rona's home base in the Montreal suburb of Boucherville, Quebec.
It also said it would retain the vast majority of Rona's employees, keep the brand and ramp up distribution to independent dealers, many of whom had opposed the previous deal.
Lowe's previous attempt to take over Rona became a hot-button issue in Quebec.
Quebec's economic development minister said it would not be in the interest of the Liberal government to block the new deal, despite a call from the opposition Parti Québécois to reject it.
Asked on a call with analysts why Lowe's had made a new offer, Chief Executive Robert Niblock said Rona was "a much better business today."
After years of disappointing sales, Rona has been closing unprofitable stores and generally streamlining operations under Chief Executive Robert Sawyer. Sales at established stores have risen five quarters in a row. Continued...