US home improvement chain Lowe's makes takeover bid for RONA

By Sudarshan Sitaula

RONA Inc. is under new management. United States-based hardware retail chain Lowe’s Companies Inc. announced today that it has entered into an agreement to acquire the similarly-focused Canadian chain—a transaction valued at approximately C$3.2 billion, or US$2.3 billion.

"We are very excited about this transaction as it leverages the strengths of two great companies, positioning us for continued success in Canada’s over C$45 billion and growing home improvement industry,” said Lowe’s Chairman, President and CEO Robert A. Niblock, in a statement from the chain released this morning. “The strategic rationale of this transaction, for both companies, is very compelling.”

For Lowe’s, a key advantage of this acquisition is the access it provides to all-new markets—specifically Quebec, where the majority of RONA locations are concentrated and the brand is known as a market leader.

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As the entrance and exit of Target Canada highlighted, successful expansion into Canada is not a sure thing for US businesses—lasting success depends heavily on a combination of closely measured growth and an understanding of Canadian culture and consumer values. Lowe’s has already started organic expansion within Canada, and is attempting to ensure a better chance of success with this acquisition by working closely with RONA to stay true to its original spirit.

“We have committed to maintaining RONA’s operations in Boucherville, where we will headquarter our Canadian businesses, and plan to continue to operate RONA’s multiple retail banners and distribution services to independent dealers,” Niblock continued. “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.”

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Meanwhile for RONA the key benefit is the access to growth and expansion that the support of Lowe’s can unlock.

"We believe the time is right to take the next step in the evolution of the RONA family,” said RONA Chairman Robert Chevrier. “The team at Lowe’s has presented us with an excellent plan that enables our company to maintain its brand power while at the same time leveraging Lowe’s global presence to build upon and expand our reach. With commitments made by Lowe’s to our employees, potential new markets for Canadian manufacturers and product offerings for our independent dealers, this transaction presents the ideal opportunity for the continued growth of our company while delivering an attractive premium for our shareholders."

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