Lowe’s will acquire home improvement retailer RONA, also known as “the Canadian Lowe’s,” for C$3.2 billion (US$2.3 billion). Sylvain Prud’homme, President of Lowe’s Canada, will lead all Canadian operations.
Because of its strong presence in Canada, RONA hasn’t left much room for Lowe’s to expand in the market. The transaction will help broaden the U.S. retailer’s presence and gain a foothold for it in Quebec, where Lowe’s currently has no stores.
“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,” said Robert Chevrier, RONA Chairman, in a statement. “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.”
Lowe’s isn’t the only retailer that has had trouble growing in Canada. Last year, Target made the decision to close its stores in The Great White North due to low profits. Kmart, RadioShack and Sony all pulled the plug on their Canadian stores as well.
The agreement means Lowe’s is expected to acquire all of the issued and outstanding shares of RONA for C$24 per share, as well as the issued and outstanding preferred shares in C$20 per share — both to be paid in cash.