Lowe’s Drops Bid for Canadian Retailer Rona (LOW, HD, USHS)

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.

Paul Ausick