Lowe's Drops Bid to Buy Rona
Lowe' Companies is no longer trying to buy Rona Inc., a controversial plan that would have seen Canada's largest home-improvement retail chain acquired for
The U.S. chain's withdrawal Monday comes seven weeks after Rona, the Quebec government and others objected to the U.S. company's overtures, which had begun privately in late 2011 and became public in late July.
"Lowe's continues to believe that a combination of Lowe's and Rona makes business sense and would create significant value for all stakeholders,'' Lowe's said in a statement early Monday.
"It is unfortunate that the Rona Board of Directors did not recognize the important economic and commercial benefits of this proposal for its stakeholders and for Canada,'' the statement said.
"Lowe's remains committed to the Canadian market and will continue delivering outstanding home improvement products and services to its Canadian customers.''
Although it is the second-largest home improvement retailer in the United States, after Home Depot, Lowe's has a relatively small presence in Canada.
Only 31 of Lowe's stores are in Canada, out of 1,745 across North America.
Rona has by far the largest number of company and affiliate-owned home-improvement locations in Canada under its banner, with Home Depot a distant second.
Rona has more than 30,000 employees operating a network of nearly 800 stores under several banners as well as 14 hardware and construction distribution centres. Home Depot currently has 180 stores across Canada.
North Carolina-based Lowe's had informally offered C$14.50 per share in cash but there was little enthusiasm for the proposal, even among analysts that cover the company.
They have said Lowe's would be better to improve its performance in the U.S. market, which is showing signs of revival as home-building and home sales finally begin to recover from about five years of depressed activity.
The U.S. company also faced a political battle in Rona's home market of Quebec, which has undergone an election that resulted in the separatist Parti Quebecois party coming to power as a minority government.
The Quebec Liberals, a federalist party that was defeated in the Sept. 4 election, had already said clearly that they opposed a foreign takeover of Rona and a PQ government would likely be even less in favour of Lowe's buying Rona.
(The Canadian Press)