Reuters – Home Improvement Chain Rona Rejects Buyout Offer

Rona Inc., a Canadian home improvement chain, has rejected an unsolicited C$1.8 billion ($1.8 billion) takeover bid from Lowe’s Cos Inc., saying the offer was not in the best interests of shareholders, Reuters reported Tuesday. Rona said on Tuesday it had received a C$14.50 per share proposal from Lowe’s, the world’s second-largest home improvement chain, on Sunday, July 8. It closed at C$10.61 on the Toronto Stock Exchange on Friday, July 6.

(Reuters) – Rona Inc , once Canada’s dominant do-it-yourself chain, has rejected an unsolicited C$1.8 billion ($1.8 billion) takeover bid from Lowe’s Cos Inc , saying the offer was not in the best interests of shareholders.

Rona said on Tuesday it had received a C$14.50 per share proposal from Lowe’s, the world’s second-largest home improvement chain, on Sunday, July 8. It closed at C$10.61 on the Toronto Stock Exchange on Friday, July 6.

Shares of Rona, with a market value of C$1.44 billion, closed at C$11.87 on Monday on the Toronto Stock Exchange. The stock has risen 12 percent in the last three months, partly on hopes that Lowe’s might put in a bid.

Boucherville, Quebec-based Rona has struggled as U.S.-based Lowe’s and Home Depot have made inroads. Sales at Rona’s established stores, or same-store sales – a key measure for retailers – dropped 7.3 percent in the year ended December 25, 2011.

Speculation about Lowe’s intentions came front and center in early April when one of the U.S.-based chain’s top executives told Reuters in an interview that Rona was a “very interesting company.

At the time, Lowe’s Chief Financial Officer Robert Hull said he was open to all options. But Rona, Canada’s home-grown answer to Home Depot Inc and Lowe’s, promptly cooled the speculation by insisting it was not up for sale.

In response to Lowe’s offer, Rona said in a statement it planned to stay focused on executing on its business plan and capitalizing on opportunities that it sees for its business.

It previously said it would close or split up 23 of its 79 biggest stores and open smaller outlets as it looks to rebound from a sharp decline in sales at established stores, which it has blamed in part on weak consumer confidence.

Scotiabank and BMO Capital Markets are acting as Rona’s financial advisors, with Norton Rose Canada LLP and Davies Ward Phillips & Vineberg acting as its legal advisors.

(Reporting by Euan Rocha In Toronto, Bhaswati Mukhopadhyay in Bangalore; Editing by Frank McGurty)