Mooresville, N.C.-based Lowe’s Companies will acquire Caandian home-improvement chain Rona for a about $2.3 billion. "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 ($32 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."
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.
The combined companies will be tied with Home Depot as Canada’s biggest home improvement chain, with $5.6-billion in annual revenue. Rona currently has 236 owned and 260franchised stores. Lowe’s has stores in Canada, and plans to grow that number to 70 stores within three years.
Lowe’s says it has identified over C$1 billion ($720 million) 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.
