MONTREAL — U.S.-based Lowe’s may not have ended its cross-border courtship for Rona Inc. despite abandoning its $1.8-billion bid for the Canadian home improvement chain, industry experts believe.
Quebec-based Rona said Monday it only learned through a news release that its U.S. suitor had withdrawn its unsolicited, non-binding acquisition proposal, adding that it continues to concentrate on its own efforts to rejuvenate the company.
“Our focus is on the implementation of our business plan based on the renewal of our offer to consumers. This focus remains,” spokeswoman Valerie Lamarre said in an email.
In addition to improving the shopping experience, Rona wants to improve its financial results after months of weakness.
The U.S. chain’s withdrawal Monday will come at a cost to Rona investors, with Rona’s shares dropping more than 11 per cent following the announcement that Lowe’s is no longer contemplating an offer of $14.50 per share cash.
Rona stock closed down $1.48 to $11.29 in Wednesday trading on the Toronto Stock Exchange. Lowe’s Companies Inc. shares (NYSE:LOW) slipped 17 cents to US$29.23 in New York.
Meanwhile, analysts say Lowe’s may still have designs for Rona, if not by acquisition of the whole chain, then perhaps by adding big box stores as Rona expands the number of smaller, proximity stores.
The U.S. chain’s withdrawal comes seven weeks after Rona, the Quebec government and others objected to the U.S. company’s overtures, which had begun privately in late 2011 and became public in July.
“Lowe’s continues to believe that a combination of Lowe’s and Rona makes business sense and would create significant value for all stakeholders,” Lowe’s said in a statement Monday.
“It is unfortunate that the Rona board of directors did not recognize the important economic and commercial benefits of this proposal for its stakeholders and for Canada,” the statement said.
The potential sale of Rona surfaced in the midst of a provincial election and prompted rare agreement between the Liberal government and the Parti Quebecois about the strategic importance of the company and the need to preserve the headquarters in Quebec.
The political parties had even suggested changing provincial law to arm boards of directors with more power to veto foreign takeovers, a proposal with potential domino-effect implications for other parts of the country.