TORONTO (AP) — The Quebec provincial government said Tuesday a potential hostile takeover of Canada’s largest home improvement chain by U.S. rival Lowe’s is not in the province’s or Canada’s interest after Rona Inc. announced it rejected a $1.76 billion Canadian (US$1.75 billion) offer from Lowe’s.
Lowe’s said it’s still interested in buying the Montreal area company but Quebec finance minister Raymond Bachand said it may intervene to block any further attempt to buy it. Bachand released a statement that said it was “a transaction that serves neither the interests of Quebecers nor those of Canadians.”
Bachand called Rona a major player in the province’s economy and said it should be noted that almost half of Rona’s purchases are made in the French-speaking province and almost 85 percent in Canada. He said his government is prepared to work with Rona management in the takeover fight. Quebec’s provincial Liberal government is set to call an election this week.
Any foreign takeover of Rona would require federal government approval. Canada’s federal conservative government rejected Anglo-Australian BHP Billiton’s hostile takeover bid for Saskatchewan’s Potash Corp. under pressure from Saskatchewan’s provincial premier and ahead of a federal election. The Conservative government said the Potash takeover would not bring a net benefit to Canada,
Rona, based in Boucherville, Quebec, said Tuesday the offer from its American rival wouldn’t be in its shareholders’ best interest and said Rona remains focused on its current business plan. Rona said it received the offer on July 8 and told Lowe’s on July 26 that it was rejecting the proposal.
Lowe’s offered to acquire all its shares for CA$14.50 (US$14.69) each, more than CA$2.50 per share above Rona’s closing stock price on Monday. Rona shares closed Monday at CA$11.87 on the Toronto Stock Exchange.
Lowe’s confirmed the bid in a statement and said institutional fund managers controlling about 15 percent of Rona’s stock have expressed support for the offer.
“We are disappointed that Rona’s board of directors has rejected our friendly non-binding proposal, which is clearly attractive for Rona shareholders,” said Robert Niblock, the chairman, president and chief executive of Lowe’s.
Headquartered in Mooresville, North Carolina, Lowe’s is relatively small in Canada — with only about 31 stores. Lowe’s has over 1,700 stores in the U.S.
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 centers.
Lowe’s is the latest U.S. retailer looking to expand in Canada. Target is set to enter Canada next year.
