Reuters: Global Markets: Rona says it's not for sale, shares retreat

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Rona says it's not for sale, shares retreat Apr 4th 2012, 15:08 TORONTO | Wed Apr 4, 2012 11:08am EDT TORONTO (Reuters) - Shares of Canadian home-improvement retailer Rona Inc (RON.TO) fell on Wednesday after the company said it was not for sale. The stock closed up 12 percent on Tuesday after the chief financial officer of competitor Lowe's Cos Inc (LOW.N), Robert Hull, called Rona a "very interesting company". He told Reuters that Lowe's was open to all options should the Canadian chain put itself up for sale. In a statement after the market close, Rona said combining with another company would not be in the best interests of the company or its stakeholders. Responding on Wednesday, analysts noted that Rona has a shareholder rights plan. Such plans are often designed to discourage takeover attempts. Canaccord Genuity analyst Derek Dley said he was surprised by the stock's reaction on Tuesday. He said the market was likely betting not on a straight takeover, but that Rona might sell some of its bigger locations. "Lowe's wants to expand in Canada," he said in an interview. "Rona's big-box locations would be a nice way to do that. That said, the reason I was surprised is, I think Rona has made it pretty clear over the last few years that they're not looking to sell their remaining big-box locations." Rona said on February 23 that it was shifting its focus away from big-box stores, and would close or cut the size of 23 locations to stay competitive. Dley said Rona's remaining big-box outlets are mostly in Quebec, a strong market for the chain. National Bank Financial analyst Vishal Shreedhar put the chance of Lowe's buying Rona in the next year at 25 percent. "We do not think that Rona is a good fit for Lowe's," he wrote in a Wednesday morning note to clients. "The key consideration for Lowe's will be how much it is willing to change its approach in order to deliver faster growth in Canada." Shreedhar said the two chains have different store-ownership structures, and that Rona operates several store sizes and banners, while Lowe's prefers to standardize outlets. Once Canada's dominant do-it-yourself chain, Boucherville, Quebec-based Rona has struggled as U.S.-based Lowe's and Home Depot (HD.N) have made inroads. Sales at Rona's established stores, a key measure for retailers, fell 7.3 percent in the year ended December 25, 2011. Rona's stock was down 4.6 percent at C$10.00 on Wednesday morning on the Toronto Stock Exchange. ($1=$1.00 Canadian) (Reporting By Allison Martell; Editing by Peter Galloway) Link this Share this Digg this Email Reprints

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