Seems like Lowe's has been working for a while on a friendly bid with the board and without the board's co-operation they are reaching out to shareholders. I expect a hostile bid at a higher price.
Rona suitor Lowe's makes $14.50-a-share offer public
2012-07-31 11:03 ET - News Release
Mr. Robert Niblock of Lowe's reports
LOWE'S CONFIRMS NON-BINDING PROPOSAL TO RONA BOARD TO ACQUIRE RONA FOR C$14.50 IN CASH PER SHARE
Lowe's Companies Inc. confirmed today that it has made a non-binding proposal to the board of directors of Canadian home improvement and hardware retailer Rona Inc. to acquire all of the issued and outstanding common shares of Rona for $14.50 in cash per share. A number of institutional shareholders representing in the aggregate approximately 15 per cent of Rona's outstanding shares have indicated that they support Lowe's proposal. The proposal, which is subject to the satisfactory completion of confirmatory due diligence, represented an attractive premium of 36.7 per cent to the $10.61 closing share price on July 6, 2012, and a premium of 42.4 per cent to the volume-weighted average share price of $10.18 for the 20 trading days ended July 6, 2012, the last trading day prior to the submission of the Lowe's proposal. However, the proposal was rejected by the board of directors of Rona.
The non-binding proposal was delivered to Rona board chairman Robert Pare on July 8, 2012. Rona's board asked Lowe's for additional time to consider the proposal but, subsequently, rejected it. In light of this decision, Lowe's is making its proposal public in its entirety to allow for all Rona shareholders and other stakeholders to evaluate the numerous economic and commercial benefits outlined in the proposal, and to allow for shareholders to communicate their views directly to Rona's board. Lowe's proposal letter is appended in its entirety to this news release.
At Rona's request, the chief executive officers of Lowe's and Rona first met one year ago on July 27, 2011, to discuss a potential relationship between the two companies. Rona's CEO subsequently visited Lowe's in North Carolina to continue the initial discussions. Including these initial meetings, the two companies have discussed or reviewed proposals for a working arrangement between them, including a previous proposal by Lowe's to acquire Rona, dated Dec. 15, 2011. That proposal was rejected by the Rona board.
Robert A. Niblock, chairman, president and chief executive officer of Lowe's, said: "We are disappointed that Rona's board of directors has rejected our friendly non-binding proposal, which is clearly attractive for Rona shareholders. We believe a combination of Lowe's and Rona makes enormous business sense. In addition, our proposal includes a number of important commitments to Rona that will benefit key stakeholders, including Rona's dealer owners, employees, suppliers, customers and local communities, and would keep Rona's headquarters in Boucherville, Que.
"We reiterate our proposal to the Rona board. We hope that in the exercise of its fiduciary duties, Rona's board will reconsider and recognize that our proposal represents a very attractive opportunity for all Rona shareholders and the company's major stakeholders. Lowe's operates with the utmost respect and support for the communities where we do business, and our proposal demonstrates Lowe's respect for the economic and cultural heritage of this important Quebec-based business. Bottom line, we believe that our proposal is good for Rona and the communities it serves in Quebec as well as across Canada, and it is also good for consumers. We encourage the board of Rona to reconsider its position," concluded Mr. Niblock.