Rona shareholders overwhelmingly approve $3.2 billion Lowe’s takeover

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 percent of votes cast, representing 70.22 per cent of Rona’s 106.9 million common shares, supported the offer first announced nearly two months ago.

The transaction pays Rona shareholders $24 cash per common share – about double exactly what the stock was worth prior to the offer.

However, preferred shareholders, who have been offered just $20 a share, $5 less than the initial purchase price, rejected the sale. 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 select few of investors won’t affect completing the offer. The preferred shares will continue to be listed for trading on the Toronto Stock market like a subsidiary of Lowe’s.

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The transaction is anticipated to close after May following approval by Investment Canada and also the Competition Bureau.

Rona chairman Robert Chevrier said he was relieved that shareholders had endorsed the deal.

But he said it was unfortunate that certain of Quebec’s largest companies needed to look for strategic alternatives to compete with Lowe’s within an oversaturated Canadian home renovation retail sector.

Representatives of the shareholder rights group MEDAC said they hope the government agencies will set conditions to ensure Lowe’s lives as much as 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, possibly the major stores will be eventually merged (into the Lowe’s brand),” he told reporters.

Lowe’s has said it is planning to double the operating profitability from the combined Canadian company over 5 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.