LITTLE CURRENT—American retailing giant Lowe’s Company Inc. is purchasing Quebec-based RONA Inc. in a deal worth $3.2 billion, but while the reaction in Quebec has been negative, locally, the deal promises good things for local consumers.
Aaron Farquhar, manager of the RONA Little Current Building Centre, was adamant that there will be little to no impact on the Island operation. “No it shouldn’t,” he replied when asked if the deal will affect the local operation. “If anything, it will mean a bit more selection for our customers,” he added.
The deal specifies that RONAs will remain RONAs on their signs, despite the purchase by Lowe’s.
“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 $45 billion and growing home improvement industry,” said Lowe’s Chairman, President and CEO Robert A. Niblock in a press release following the announcement of the deal. “The strategic rationale of this transaction for both companies is very compelling.”
“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,” added Mr. Niblock. “Importantly, the transaction also provides Lowe’s with entry into Quebec, where RONA is the market leader and we have no presence. 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. 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.”
RONA’s chairman, Robert Chevrier, agreed, pointing out in the same press release that RONA “believes the time is right to take the next step in the evolution of the RONA family. 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.”
Not everyone is enamoured of the deal, however, as both opposition parties in Quebec have called for the deal to be halted, an unlikely event given that both company board’s have agreed to the deal. The Quebec government has indicated that they are comfortable with the reassurances from the companies that jobs will remain in Quebec and that Lowe’s Canadian headquarter operations will remain in that province.
This isn’t the first time that Lowe’s has come wooing the Canadian hardware giant. A 2012 bid was tanked by a then-hostile RONA board of directors and was a major issue during the Quebec provincial election and was highly politicized during the provincial Liberal leadership campaign as well.
Lowe’s is based in Mooresville, North Carolina and has more than 1,800 stores and 265,000 employees in the US, Mexico and Canada, but until this purchase, it had no stores in Quebec, while Rona, whose headquarters are in Boucherville, Quebec has approximately 500 corporate and independent affiliate dealer stores and nine hardware and construction material distribution centres. The company has more than 17,000 employees in corporate stores and over 5,000 employees in the stores of its independent affiliate dealers.
Key items released by the companies about the deal include that: the transaction unanimously approved by both companies’ boards of directors; the agreement is based on compelling strategic rationale for both companies; Lowe’s pledges important commitments to RONA’s key Canadian stakeholders; Lowe’s to locate its Canadian head office in Boucherville, Quebec; the Canadian operations are to be headed by Sylvain Prud’homme, president of Lowe’s Canada; and the acquisition accelerates Lowe’s growth strategy in Canada. Under the deal, Lowe’s will maintain RONA’s multiple retail store banners; commits to enhance distribution services to independent dealers; that RONA will continue to employ the vast majority of its current employees and maintain key executives from RONA’s strong leadership team; Lowe’s will continue RONA’s local and ethical procurement strategy and potentially expand relationships both Lowe’s and RONA have developed with Canadian manufacturers and suppliers; and to continue to support Canadian communities through RONA and Lowe’s charitable and environmental initiatives.
