-- Transaction valued at
C$3.2 billion (US$2.3 billion) --
- Transaction unanimously approved by both companies' Boards
of Directors
- 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; Canadian operations to
be headed by Sylvain Prud'homme, President of Lowe's
Canada
- Acquisition
accelerates Lowe's growth strategy in Canada
MOORESVILLE, N.C. and
BOUCHERVILLE, Quebec, Feb. 3, 2016 /PRNewswire/ -- Lowe's
Companies, Inc. (NYSE: LOW) ("Lowe's" or the "Company") and RONA
inc. (TSX: RON, RON.PR.A) ("RONA") announced today that they have
entered into a definitive agreement under which Lowe's is expected
to acquire all of the issued and outstanding common shares of RONA
for C$24 per share in cash, and all
of the issued and outstanding preferred shares of RONA for
C$20 per share in cash. The
total transaction value is C$3.2
billion (US$2.3 billion) (the
"Transaction"). The offer represents a premium of 104 percent
to RONA's closing common share price on February 2, 2016 and a 38 percent premium to
RONA's 52-week high of C$17.36.
Together, Lowe's Canada and RONA
stores will create Canada's
leading home improvement retailer with 2015 pro forma revenues from
Canadian operations of approximately C$5.6
billion. Excluding transaction and integration costs, we
anticipate the Transaction will be accretive to Lowe's earnings in
the first year following the close of the acquisition.
The Transaction has been unanimously approved by the Boards of
Directors of Lowe's and RONA and is supported by the
management teams of both companies. The Transaction is expected to
proceed by way of a plan of arrangement by which Lowe's would
acquire all of the outstanding shares of RONA, subject to RONA
common shareholder approval and satisfaction of customary
conditions, including the receipt of all necessary regulatory
approvals. The RONA Board has received an opinion from Scotia
Capital Inc. that the consideration to be received by RONA's common
and preferred shareholders pursuant to the Transaction is fair,
from a financial point of view.
The RONA Board will recommend that RONA shareholders vote in
favor of the plan of arrangement at a special meeting of
shareholders expected to be held before the end of the first
quarter of 2016. Further information regarding the Transaction will
be included in RONA's information circular to be mailed to RONA
shareholders in advance of the special meeting. The arrangement
agreement provides that RONA is subject to customary
non-solicitation provisions.
"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
C$45 billion and growing home
improvement industry. The strategic rationale of this transaction,
for both companies, is very compelling," said Lowe's Chairman,
President and CEO Robert A.
Niblock.
"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 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
added, "We believe 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."
The Canadian operations will be led by Sylvain Prud'homme,
president of Lowe's Canada. The
senior management teams of both companies will work to assure a
smooth and effective transition.
"We are pleased with the solid position we have established in
key Canadian markets in recent years and the positive reception
from our local customers," said Prud'homme. "We look forward to
continuing our commitment to the Canadian market and further
enhancing our offering to the customers of both Lowe's and RONA. We
have great respect for RONA's leadership team and RONA's talented
employee base and look forward to working together to take our
businesses to the next level."
Lowe's has identified over C$1
billion of opportunities to further increase revenue and
operating profitability in Canada.
These include: expanding customer reach and serving a new portion
of the market by applying Lowe's expertise in certain product
categories, such as appliances; enhancing customer relevance,
utilizing Lowe's strengths as a leading omni-channel home
improvement company and drawing on its customer experience design
capabilities; and driving increased profitability in Canada by leveraging shared supplier
relationships and enhanced scale, as well as Lowe's private label
capabilities, in addition to eliminating RONA's public company
costs. Given these opportunities, Lowe's believes there is
potential to double operating profitability in Canada over five years.
Lowe's Commitments to RONA Stakeholders in Canada
In addition to the attractive premium offered to RONA's
shareholders, Lowe's has agreed to key commitments for RONA and its
stakeholders. These include:
- to headquarter the Canadian businesses in Boucherville, Quebec;
- to maintain RONA's multiple retail store banners;
- to enhance distribution services to independent dealers;
- for RONA to continue to employ the vast majority of its current
employees and maintain key executives from RONA's strong leadership
team;
- to 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.
Lowe's Companies, Inc. Conference Call
Lowe's will hold a conference call to discuss the announcement
today at 8:00 a.m. EST. The
conference call will be available by webcast and can be accessed by
visiting Lowe's website at www.Lowes.com/investor, clicking on
webcasts, and selecting Lowe's Companies Canada Acquisition
Conference Call. Supplemental slides will be available 15 minutes
prior to the start of the conference call. A replay of the call
will be archived on Lowes.com/investor.
RONA inc. Conference Call
RONA will hold a conference call to discuss the announcement
today at 10:30 a.m. EST. The
conference call will be available by webcast and can be accessed by
visiting RONA's website at rona.ca/corporate/investors
News Conference
Lowe's and RONA will host a joint news conference at noon today
at Le Centre Sheraton Montreal Room Hémon, 1201 Boulevard
René-Lévesque O, Montréal, QC H3B 2L7. Executives of both
companies will be present to answer questions from the news media.
An audio webcast of the news conference will be made available
during the event by clicking this link and can be accessed
following the event by visiting http://www.Lowes.com/investor and
rona.ca/corporate/investors.
Advisors
CIBC World Markets Inc. and RBC Capital Markets are serving as
financial advisors to Lowe's in connection with the
Transaction. Stikeman Elliott LLP is serving as legal counsel
to Lowe's in Canada, and Hunton
& Williams LLP is serving as legal counsel to Lowe's in the
U.S. Scotia Capital Inc. is serving as exclusive financial
advisor to RONA. Norton Rose Fulbright Canada LLP is serving
as legal counsel to RONA.
About Lowe's Companies, Inc.
Lowe's is a FORTUNE® 50 home improvement company serving
approximately 16 million customers a week in the United States, Canada and Mexico through its stores and online at
Lowes.com, Lowes.ca and Lowes.com.mx. With fiscal year 2014
sales of US$56.2 billion, Lowe's has
more than 1,845 home improvement and hardware stores and 265,000
employees. Founded in 1946 and based in Mooresville, N.C., Lowe's supports the
communities it serves through programs that focus on K-12 public
education and community improvement projects. For more information,
visit Lowes.com.
About RONA inc.
RONA inc. is a major Canadian retailer and distributor of
hardware, building materials and home renovation products. RONA
operates a network of close to 500 corporate and independent
affiliate dealer stores in a number of complementary formats. With
its nine distribution centres, RONA serves its network of stores
and several independent dealers operating under other banners,
including Ace, for which RONA owns the licensing rights and is the
exclusive distributor in Canada.
With more than 17,000 employees in corporate stores and more
than 5,000 employees in the stores of its independent affiliate
dealers, RONA generates annual consolidated sales of C$4.1 billion. For more information, visit
RONA.ca.
Forward-Looking Statements – Lowe's Companies, Inc.
This news release includes "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995
including those regarding the Transaction and the expected impact
of the Transaction on Lowe's strategic and operational plans and
financial results. Statements including words such as "may",
"will", "could", "should", "would", "plan", "potential", "intend",
"anticipate", "believe", "estimate" or "expect" and other words,
terms and phrases of similar meaning are forward-looking
statements. Forward-looking statements involve estimates,
expectations, projections, goals, forecasts, assumptions, risks and
uncertainties. Such forward-looking statements include, but
are not limited to, statements or implications about the benefits
of the Transaction, including future financial and operating
results, Lowe's or RONA's plans, objectives, expectations and
intentions, the expected timing of completion of the Transaction,
expectations for sales growth, comparable sales, earnings and
performance, shareholder value, capital expenditures, cash flows,
the housing market, the home improvement industry, demand for
services, share repurchases, Lowe's strategic initiatives, any
statement of an assumption underlying any of the foregoing and
other statements that are not historical facts. Although
Lowe's believes that the expectations, opinions, projections, and
comments reflected in these forward-looking statements are
reasonable, it can give no assurance that such statements will
prove to be correct. A wide variety of potential risks,
uncertainties, and other factors could materially affect Lowe's
ability to achieve the results either expressed or implied by these
forward-looking statements including, but not limited to, changes
in general economic conditions, such as the rate of unemployment,
interest rate and currency fluctuations, fuel and other energy
costs, slower growth in personal income, changes in consumer
spending, changes in the rate of housing turnover, the availability
of consumer credit and of mortgage financing, inflation or
deflation of commodity prices, and other factors which can
negatively affect Lowe's customers, as well as its ability to: (i)
respond to adverse trends in the housing industry, such as a
demographic shift from single family to multi-family housing, a
reduced rate of growth in household formation, and slower
rates of growth in housing renovation and repair activity, as well
as uneven recovery in commercial building activity; (ii) secure,
develop, and otherwise implement new technologies and processes
necessary to realize the benefits of Lowe's strategic initiatives
and enhance its efficiency; (iii) attract, train, and retain
highly-qualified associates; (iv) manage its business effectively
as Lowe's adapts its traditional operating model to meet the
changing expectations of its customers; (v) maintain, improve,
upgrade and protect its critical information systems from data
security breaches and other cyber threats; (vi) respond to
fluctuations in the prices and availability of services, supplies,
and products; (vii) respond to the growth and impact of
competition; (viii) address changes in existing or new laws or
regulations that affect consumer credit, employment/labor, trade,
product safety, transportation/logistics, energy costs, health
care, tax or environmental issues; and (ix) respond appropriately
to unanticipated failures to maintain a high level of product and
service quality that could result in a negative impact on customer
confidence and adversely affect sales. In addition, Lowe's could
experience additional impairment losses if either the actual
results of its operating stores are not consistent with the
assumptions and judgments it has made in estimating future cash
flows and determining asset fair values, or Lowe's is required to
reduce the carrying amount of its investment in certain
unconsolidated entities that are accounted for under the equity
method. With respect to the Transaction discussed herein
specifically, potential risks include the possibility that the
Transaction will be rejected by RONA's shareholders; the
possibility that even if the Transaction is approved by RONA's
shareholders, the Transaction will not close or that the closing
may be delayed; the possibility that RONA's board of directors
could receive and approve a superior acquisition proposal; the
failure to obtain, any necessary actions to obtain and the timing
to obtain any required regulatory approvals for the Transaction or
any transaction ancillary thereto; the effect of the announcement
of the Transaction on Lowe's and RONA's strategic relationships,
operating results and businesses generally; significant transaction
costs or unknown liabilities; failure to realize the expected
benefits of the Transaction; and general economic conditions. For
more information about these and other risks and uncertainties that
Lowe's is exposed to, you should read the "Risk Factors" and
"Critical Accounting Policies and Estimates" included in Lowe's
most recent Annual Report on Form 10-K to the United States
Securities and Exchange Commission (the "SEC") and the description
of material changes therein or updated version thereof, if any,
included in Lowe's Quarterly Reports on Form 10-Q or subsequent
filings with the SEC.
The forward-looking statements contained in this news release
are expressly qualified in their entirety by the foregoing
cautionary statements. All such forward-looking statements are
based upon data available as of the date of this release or other
specified date and speak only as of such date. All subsequent
written and oral forward-looking statements attributable to Lowe's
or any person acting on behalf of Lowe's about any of the matters
covered in this release are qualified by these cautionary
statements and in the "Risk Factors" included in Lowe's most recent
Annual Report on Form 10-K to the SEC and the description of
material changes, if any, therein included in Lowe's Quarterly
Reports on Form 10-Q or subsequent filings with the SEC. Lowe's
expressly disclaims any obligation to update or revise any
forward-looking statement, whether as a result of new information,
change in circumstances, future events, or otherwise.
Forward-Looking Statements – RONA inc.
This press release includes "forward-looking statements" that
involve risks and uncertainties. All statements other than
statements of historical facts included in this press release,
including statements regarding the prospects of the industry and
prospects, plans, financial position and business strategy of RONA
may constitute forward-looking statements within the meaning of the
Canadian securities legislation and regulations. Forward-looking
statements generally can be identified by the use of
forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "anticipate", "plan", "foresee", "believe" or
"continue" or the negatives of these terms, variations of them,
similar terminology or the use of future tenses. More particularly
and without limitation, this press release contains forward-looking
statements and information concerning: statements or implications
about the anticipated benefits of the Transaction to RONA, Lowe's
and their respective shareholders, including future financial and
operating results, Lowe's or RONA's plans, objectives, expectations
and intentions; and the anticipated timing for the special meeting
of RONA shareholders.
In respect of the forward-looking statements and information
concerning the anticipated benefits of the proposed Transaction and
the anticipated timing for the special meeting of RONA
shareholders, RONA has provided such in reliance on certain
assumptions that it believes are reasonable at this time, including
assumptions as to the ability of the parties to receive, in a
timely manner and on satisfactory terms, the necessary regulatory,
court and shareholder approvals; the ability of the parties to
satisfy, in a timely manner, the other conditions to the closing of
the Transaction; and other expectations and assumptions concerning
the Transaction. The anticipated timing to hold the shareholder
meeting may change for a number of reasons. Although RONA believes
that the expectations reflected in these forward-looking statements
are reasonable, it can give no assurance that these expectations
will prove to have been correct. Accordingly, investors and others
are cautioned that undue reliance should not be placed on any
forward-looking statements.
Risks and uncertainties inherent in the nature of the
Transaction include without limitation the failure of the parties
to obtain the necessary shareholder, regulatory and court
approvals, or to otherwise satisfy the conditions to the completion
of the Transaction, in a timely manner, or at all; significant
transaction costs or unknown liabilities; failure to realize the
expected benefits of the Transaction; and general economic
conditions. Failure to obtain the necessary shareholder, regulatory
and court approvals, or the failure of the parties to otherwise
satisfy the conditions to or complete the Transaction, may result
in the Transaction not being completed on the proposed terms, or at
all. In addition, if the Transaction is not completed, and RONA
continues as an independent entity, there are risks that the
announcement of the Transaction and the dedication of substantial
resources of RONA to the completion of the Transaction could have
an impact on RONA's business and strategic relationships (including
with future and prospective employees, customers, dealer-owners,
distributors, suppliers and partners), operating results and
businesses generally, and could have a material adverse effect on
the current and future operations, financial condition and
prospects of RONA. Furthermore, the failure of RONA to comply with
the terms of the arrangement agreement may, in certain
circumstances, result in RONA being required to pay a fee to
Lowe's, the result of which could have a material adverse effect on
RONA's financial position and results of operations and its ability
to fund growth prospects and current operations.
For more information on the risks, uncertainties and assumptions
that would cause RONA's actual results to differ from current
expectations, please also refer to RONA's public filings available
at www.sedar.com and www.RONA.ca. In particular, further details
and descriptions of these and other factors are disclosed in RONA's
Management's Discussion and Analysis for the fiscal year ended
December 28, 2014 under the "Risks
and uncertainties" section. The forward-looking statements
contained in this press release are expressly qualified in their
entirety by the foregoing cautionary statements. RONA expressly
disclaims any obligation or intention to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, unless required by applicable
securities laws.
NO OFFER OR SOLICITATION
This announcement is for informational purposes only and does
not constitute an offer to purchase or a solicitation of an offer
to sell RONA common shares.
Logo -
http://photos.prnewswire.com/prnh/20131007/MM93272LOGO
Logo -
http://photos.prnewswire.com/prnh/20160203/329113LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/lowes-to-acquire-rona-creating-canadas-leading-home-improvement-retailer-300214396.html
SOURCE Lowe's Companies, Inc.