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 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.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Housing, Mergers and Buy Outs Tagged: HD, LOW, USHS
Read Full Story

Markets

DJIA 26,656.98 251.22 0.95%
NASDAQ 8,028.23 78.19 0.98%
NIKKEI 225 23,674.93 2.41 0.01%
HANG SENG 27,477.67 70.30 0.26%
DAX 12,326.48 107.46 0.88%
USD (per EUR) 1.18 0.01 0.89%
USD (per CHF) 0.96 -0.01 -0.84%
JPY (per USD) 112.45 0.13 0.12%
GBP (per USD) 1.33 0.01 0.98%