A day after Canadian hardware and renovation supplier Rona Inc. rejected a hostile takeover bid from U.S. home improvement giant Lowe’s Companies Inc., a key Rona shareholder confirmed its backing for the bid.
Invesco Canada, one of Quebec-based Rona’s biggest shareholders, expressed disappointment in the company’s management and said it supports Lowe’s unsolicited proposal of $1.76 billion, according to the Canadian Press.
RONA’s strategic focus remains to execute on its business plan.
-- Rona board of directors
Rona’s board of directors had unanimously decided that the takeover bid was “not in the best interests of RONA and its stakeholders,” the company stated in a press release on July 31.
“RONA’s strategic focus remains to execute on its business plan with a view to capturing the significant opportunities that it sees for the business.”
The Quebec government quickly responded to the news and announced plans to block the deal. The federal Liberals concurred. Liberal Quebec Caucus Chair Denis Coderre said Wednesday that his government has “serious concerns about what a foreign takeover of Rona would mean for the province” and called for changes to the federal law governing large foreign investment in Canada.
“The federal Liberal Party has been calling for changes to the Investment Canada Act which would provide a clear role for affected provincial governments and specific ways in which the public can express their views during the review process,” he said in a release.
Coderre also said the affected provinces should be formally consulted, and asked the federal government to clarify what would be a “net benefit” to Canada.
Earlier in July, Lowe’s offered C$14.50 per share for all of RONA’s issued and outstanding shares.
RONA’s board of directors reviewed the proposal and decided to turn it down on July 26. After Lowe’s expressed its “desire to proceed with a board-supported transaction” on July 28, Rona published an official statement to voice its rejection of the takeover bid.
The day Rona rejected the bid, its stock rose by $1.63 per share, closing at $13.50 on Tuesday.
Lowe’s, on the other hand, saw a $1.49 decrease in the value of its stock, closing at $25.37 per share at the end of the day.
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