The American hardware store chain Lowe’s announced they will be buying out Canadian retailer Rona for $3.2 billion. Lowe’s will take over Rona’s head office location in Boucherville, Quebec and will be led by president Sylvain Prud’homme.
Completion of the deal will depend on the approval of Rona’s common shareholders, but has the support and unanimous approval of the boards of directors from both companies.
“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,” Lowe’s CEO Robert Niblock said in a statement. “The strategic rationale of this transaction, for both companies, is very compelling.”
Lowe’s is offering $24 per share, representing a 104% premium to the price of Rona’s closing shares as of Tuesday, and a 38% premium to their year high of $17.36.
Lowe’s said they have a number of plans to further increase revenue and profitability to the tune of $1 billion, including introducing appliances to their stores, selling Lowe’s private label, and enhanced customer service.
Rona has 800 stores across Canada and employs 23,000 people in both corporate stores and independent dealers. The company generates consolidated sales of $4.1 billion a year.
Lowe’s is based in Moorseville, Connecticut, with more than 1,800 stores in the U.S., Canada, and Mexico, employing 265,000 people.