Dive Brief:
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Lowe's is buying Canadian home-improvement retailer Rona in a friendly takeover with a total transaction value of $US 2.3 billion, the companies announced Wednesday. The offer represents a premium of 104% to Rona’s closing common share price Tuesday and a 38% premium to its 52-week high.
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The deal has been unanimously approved by the boards of directors of both companies, is supported by both management teams, and is subject to shareholder approval.
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Lowe’s most recently attempted to acquire Rona three years ago in a hostile takeover bid that was criticized by Quebec authorities and ultimately abandoned.
Dive Insight:
There’s been talk of a Lowe’s-Rona merger for years, but in 2012 the Canadian chain shook off the U.S. chain’s advances amidst criticism from policy makers in the provincial Quebec government and from independent Rona store owners.
But Lowe’s chairman, president and CEO Robert A. Niblock has long said that a combination of the two companies would make good business sense for both. While Lowe’s has worked on its expansion in Canada on its own for the past three years, including buying up Target leases left in the wake of that failed expansion, the company hasn’t yet moved into Quebec—till now. Perhaps he was waiting for Rona to come around all along.
“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," Niblock said in a statement. "Importantly, the transaction also provides Lowe’s with entry into Quebec, where RONA is the market leader and we have no presence.”