Lowe’s Drops Bid for Canadian Retailer Rona (LOW, HD, USHS)
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…
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
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
