Lowe's to Acquire Canada's RONA for $2.3B

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Lowe's to Acquire Canada's RONA for $2.3B

By Tim Denman - 02/15/2016
Lowe's Companies has agreed to acquire RONA Inc. for $2.3 billion. Together, Lowe's Canada and RONA stores will create Canada's leading home improvement retailer with 2015 pro forma revenues from Canadian operations of over $4 billion.

The transaction is expected to proceed by way of a plan of arrangement by which Lowe's would acquire all of the outstanding shares of RONA, subject to RONA common shareholder approval and satisfaction of customary conditions, including the receipt of all necessary regulatory approvals. The deal represents a premium of 104% over RONA's share price on February 2, 2016 and a 38% premium on RONA's 52-week high.

"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," said Lowe's Chairman, President and CEO Robert A. Niblock. "Importantly, the transaction also provides Lowe's with entry into Quebec, where RONA is the market leader and we have no presence. With our shared customer-centric values and a steadfast commitment to the Canadian market, we expect to generate significant long-term benefits for shareholders, customers, vendors, employees and the communities we serve."

Lowe's has identified over $720 million of opportunities to further increase revenue and operating profitability in Canada. These include: expanding customer reach and serving a new portion of the market by applying Lowe's expertise in certain product categories, such as appliances; enhancing customer relevance, utilizing Lowe's strengths as a leading omnichannel home improvement company and drawing on its customer experience design capabilities; and driving increased profitability in Canada by leveraging shared supplier relationships and enhanced scale, as well as Lowe's private label capabilities, in addition to eliminating RONA's public company costs. Given these opportunities, Lowe's believes there is potential to double operating profitability in Canada over five years.