Rona denies reports of takeover offer from Lowe's
A man carries building supplies from a Rona store in Toronto on July 31, 2012. (Nathan Denette / THE CANADIAN PRESS)
The Canadian Press
Published Monday, November 12, 2012 11:51AM EST
MONTREAL -- Rona has denied a newspaper report that it has received a takeover offer from Lowe's Companies or has held discussions with its U.S.-based rival.
"Rona has not received any proposal of any kind from Lowe's and there have been no discussions between the two companies on this subject," the Quebec-based company said Monday, days after Robert Dutton suddenly stepped down as CEO amid weak results, prompting some investors to urge the two sides to open talks.
Montreal La Presse reported Saturday that Dutton resigned because he disagreed with the Rona board's interest in a $15 per share offer it had received from Lowe's.
A Lowe's spokeswoman said Friday that it has not had any conversations with Rona since it withdrew its proposal in September to offer $14.50 per share cash, but Julie Yenichek wouldn't say if the company was still interested in a takeover.
Irwin Michael, portfolio manager of Toronto-based ABC Funds, one of Rona's (TSX:RON) largest shareholders, said the home-improvement retailer's board should launch discussions with Lowe's to undertake major change in the face of years of poor results and a weak retailing environment.
The Dutton era was a period when Rona grew enormously. It did so by building new big box locations, making acquisitions and partnerships in Canada's fragmented home-improvement industry, and adopting a variety of store formats.
It currently has nearly 30,000 employees and 830 locations under its banner, giving Rona a bigger reach in Canada than Home Depot or Lowe's, the No. 1 and No. 2 home improvement retailers in the United States.
Home Depot has just 180 stores across Canada and Lowe's has about 31 Canadian locations, out of 1,745 across North America.
Derek Dley of Canaccord Genuity said Lowe's shareholders weren't pleased when the company announced an interest in buying Rona and would prefer that it focus on improving the performance of its U.S. stores.
Rona chief financial officer Dominique Boies will be interim CEO while the company's board seeks a permanent successor, whom the company says must be bilingual.
On the Toronto Stock Exchange, Rona's shares were up 27 cents, or 2.67 per cent, at $10.39 in morning trading Monday.