-Quebec government voices opposition to Lowe's proposal
-Quebec examining "all means" to ensure Lowe's attempt fails
-News of Lowe's proposal comes a day before expected Quebec
election call
(Adds minister's comments in paragraphs 5 & 8-9; inserts
political context in paragraphs 11 & 14)
By Paul Vieira
OTTAWA--The government of Quebec believes home-improvement
retailer Rona Inc. (RON.T) is a "strategic asset" for Canada and
shouldn't fall into foreign hands, Quebec Finance Minister Raymond
Bachand said Tuesday.
On a conference call, he said his government - through its
investment arm, Investissement Quebec - is looking at "all means"
available to ensure Lowe's Cos.' (LOW) attempt to acquire the
Boucherville, Que., company proves unsuccessful.
"This is not a play to get a higher price" for Rona shares, Mr.
Bachand said. "I think Rona is a strategic asset for Canada as a
whole."
He noted Rona employs roughly 28,000 people across the country,
while another roughly 90,000 jobs are tied to the manufacturing and
wholesale sectors - which supply Rona with the goods it sells.
Also, Rona supports the Canadian Football League and is a sponsor
for Canada's Olympic team, he said.
Mr. Bachand believes that, under foreign control, Rona's
purchasing power could eventually be centralized offshore, putting
Canadian suppliers at risk.
Lowe's, of Mooresville, N.C., confirmed earlier Tuesday it made
a proposal valued at 1.76 billion Canadian dollars (US$1.75
billion), or C$14.50 a share, to acquire the Quebec-based company,
adding it had the support of roughly 15% of Rona's shareholders.
Rona's board rejected the unsolicited approach.
"We are not going to nationalize Rona," Mr. Bachand said of his
government's plans, while noting the government could accumulate a
"small part" in the company.
The minister also said there "may be" major shareholders who
would like to cash in on a higher share price but prefer control
over Rona remain in Canadian hands. He didn't elaborate.
"I hope Lowe's will abstain from making a hostile takeover bid.
And that's one of the main purposes of our action today - that they
are not welcome."
Prior to Mr. Bachand's conference call, Quebec's largest pension
fund - Caisse de Depot et Placement du Quebec, with over C$159
billion in net assets - said it had purchased Rona shares on the
Toronto stock exchange, raising its stake in the retailer to over
14%. Mr. Bachand said he wasn't advising or directing the Caisse to
act on the province's behalf.
As it happens, news of the unsolicited proposal for Rona emerged
a day before it is widely expected the incumbent Liberal government
will announce an election, sometime in early September. The
centrist Liberals are likely taking a hard line on Rona to avoid
being painted as selling out Quebec interests ahead of a
province-wide vote, in which its main rival is the
separatist-leaning Parti Quebecois.
Meanwhile, Mr. Bachand said he had informed the Canadian federal
government of his view that the Rona deal should be blocked, should
it come to fruition.
Canada's federal government has the power to approve or reject
foreign-led takeovers of Canadian companies, under the country's
investment laws. A spokeswoman for Canadian Industry Minister
Christian Paradis, who enforces foreign-investment laws, didn't
respond to requests for comment.
Canadian provinces don't have a formal role in the
foreign-investment review process, although they are becoming
increasingly vocal in letting their views be known. BHP Billiton's
hostile bid for Potash Corp. of Saskatchewan (POT) in 2010
ultimately failed due to political pressure applied by Saskatchewan
Premier Brad Wall on the federal government to nix the
transaction.
-Write to Paul Vieira at paul.vieira@dowjones.com
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