Lowe’s Decides to Drop Rona Bid

by Marc Bastow | September 17, 2012 11:11 am

LowesHomeImprovementLogo Lowe's Decides to Drop Rona Bid Canada has become all the recent rage for U.S. based companies, and yet another entrant into the market, home improvement company Lowe’s (NYSE:LOW[1]), is making a big effort to¬† increase its presence.

However that effort will have to wait, as Quebec, Canada based Rona (TSE:RON[2]) rejected Lowe’s $14.91 cents per share offer price for the 800-plus store outfit made in July.

Lowe’s has been operating in Canada since 2007 through its nearly 30 stores throughout the country. Within the last year a number of American based companies, from Target (NYSE:TGT[3]) to Nordstrom (NYSE:JWN[4]), have made Canada a prime target for expansion.

Lowe’s belief that the acquisition makes economic sense doesn’t appear to be shared by Rona management, who went as far as to ignore a request to perform due diligence in order to move forward with what is described as a “friendly transaction.”

Rona’s board expressed concern over a potential loss of jobs at the company despite assurances from Lowe’s. Additionally, according to[5] the Wall Street Journal Lowe’s was faced with political opposition to the deal from Ontario lawmakers who want to keep Rona in local hands.

Shares of Rona dropped just over 8% in morning trading on the news, while Lowe’s shares were down fractionally.

-Written by Marc Bastow, Assistant Editor at InvestorPlace.com

Endnotes:
  1. LOW: http://studio-5.financialcontent.com/investplace/quote?Symbol=LOW
  2. RON: http://studio-5.financialcontent.com/investplace/quote?Symbol=RON
  3. TGT: http://studio-5.financialcontent.com/investplace/quote?Symbol=TGT
  4. JWN: http://studio-5.financialcontent.com/investplace/quote?Symbol=JWN
  5. according to: http://online.wsj.com/article/SB10000872396390443995604578001892595430534.html

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