MONTREAL – Rona shareholders have overwhelmingly approved a $3.2-billion friendly takeover offer from U.S. home renovation chain Lowe’s.
More than 99.9 per cent of votes cast, representing 70.22 per cent of Rona’s 106.9 million common shares, supported the deal first announced nearly two months ago.
The transaction pays Rona shareholders $24 cash per common share — about double what the stock was worth prior to the offer.
However, preferred shareholders, who were offered just $20 a share, $5 less than the original purchase price, rejected the offer. Only a quarter of the votes cast, representing 44 per cent of the 6.9 million preferred shares, backed the transaction.
Still, the negative vote by the small group of investors won’t affect completion of the deal. The preferred shares will continue to be listed for trading on the Toronto Stock Exchange as a subsidiary of Lowe’s.
The transaction is expected to close by the end of May following approval by Investment Canada and the Competition Bureau.
Rona chairman Robert Chevrier said he was relieved that shareholders had endorsed the deal.
But he said it was unfortunate that one of Quebec’s largest companies had to look for strategic alternatives to compete with Home Depot in an oversaturated Canadian home renovation retail sector.
Representatives of the shareholder rights group MEDAC said they hope the federal agencies will place conditions to ensure Lowe’s lives up to its commitments to preserve the corporate headquarters in Quebec, keep most jobs and continue the company’s engagement with suppliers.
Outgoing Rona CEO Robert Sawyer believes Lowe’s will preserve the Rona and Reno-Depot brands in Quebec.
“Outside of Quebec it’s another ball game, probably the big box stores will be eventually merged (into the Lowe’s brand),” he told reporters.
Lowe’s has said it is aiming to double the operating profitability of the combined Canadian company over five years after identifying more than $1 billion in opportunities.
These included adding appliances to Rona stores, extending Lowe’s private label and e-commerce capabilities and leveraging its supplier relationships and enhanced scale.