Home improvement chain Lowe’s Companies Inc. (NYSE: LOW) this morning announced that it had dropped its hostile attempt to acquire Canadian home improvement retailer Rona Inc. Lowe’s had offered CDN$14.50 per share for Rona in a deal worth a total of $1.8 billion.
Rona already had rejected the offer as too low, and the company’s rejection had the support of the Quebec government, which sided with the Canadian retailer, claiming that Rona was a strategic asset for the province.
Although Lowe’s offered a 41% premium to Rona’s price, many analysts believed that the U.S. company would have to sweeten the offer in order to have a chance of succeeding. The CDN$14.50 per share offer valued Rona at just 2% above book value, and analysts believed an offer of at least CDN$16.00 per share would be required.
In early August, Lowe’s main U.S. competitor, Home Depot Inc. (NYSE: HD) acquired kitchen and bath products firm U.S. Home Systems Inc. (NASDAQ: USHS) for $93 million. U.S. Home Systems shareholders are scheduled to vote on the deal on October 26.
Lowe’s shares were up fractionally in early trading, after closing at $29.40 on Friday in a 52-week range of $18.53 to $32.29.