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"This transaction is a win win combination for Rona and Lowe's as well as all stakeholders involved," Rona Buy Women Canada Goose Hybridge Lite Jacket White Ireland CEO Robert Sawyer said in a conference call Wednesday.
Lowe's chairman and CEO Robert Niblock said the Canadian home improvement market is worth more than $45 billion and growing. The North Carolina based company estimates a compounded average growth rate of 3.9 per cent between 2014 and 2018.
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The publicly traded shares soared Wednesday to just below the offer price, with nearly nine million traded in less than an hour after the market opened. The offer is about $10 above the $14.50 per share that was rejected in 2012.
Rona chairman Robert Chevrier said Lowe's has made commitments to the Canadian company's employees, suppliers and independent dealers, including the preservation of Rona banners.
Quebec's Caisse de depot, which owns about 17 per cent of Rona, said it supports the deal.
Niblock and other Lowe's executives also said that Rona has made a number of improvements since the two companies came close to a similar takeover agreement four years ago. That attempt failed in the face of opposition from the Quebec government and a number of Rona's independent dealers.
"It is the intention to capitalize on this strong leadership position to transform the Canadian industry and offer more value to Canadian consumers."
For Rona shareholders, Lowe's (NYSE:LOW) is offering $24 cash per common share (TSX:RON) about double what the stock was worth at the end of trading on Tuesday before the announcement.
"We also like the market because of its long term fundamentals, with its high level of home ownership and well developed distribution infrastructure," he said in a separate conference call.
Lowe's said it has identified more than $1 billion in opportunities, including adding appliances to Rona stores, extending its private label and e commerce capabilities and leveraging its supplier relationships and enhanced scale.
"Overall, la Caisse believes the transaction will result in equal or superior economic activity generated by the Rona banners in Quebec," the Montreal based pension fund manager said.
Nonetheless, the announcement drew reaction from a union that represents workers at Rona. Teamsters Canada Local Union 1999 said the sale of a Quebec "economic showpiece" to American interests is raising concerns, even if Lowe's is promising to maintain the majority of Rona jobs.
"Managers at Lowe's need to know that we'll be very vigilant regarding the more than 2,000 Teamster jobs at Rona," union local president Serge Berube in a statement.
Rona said the agreement would allow it to tap into the strength of a multinational company while preserving its brand, business relationships and most of its current operations.
For Lowe's, Rona is a way to quickly become Canada's leading home improvement retailer. The acquisition would mark the company's foray into Quebec, where Rona was founded in 1939.