North Carolina-based Home Improvement Corporation, Lowe’s Companies Inc. (NYSE: LOW) has officially withdrawn its buy-out proposal which it made it to Rona Inc. on July 8, 2012.
In spite of the company’s continuous efforts to discus the proposal with Board of Directors of Rona regarding the buy-out plan, it seems that the Board has not shown any interest to the proposal or accepted to have an official talk regarding it.
Lowe’s quoted C$14.50 (14.92 USD) in cash for each of outstanding common shares of Rona which is approximately 23% higher than its current price. As on date, the company has 121.39 shares outstanding which will make the proposed deal at 1.76 billion Canadian Dollar transaction (1.81 billion USD).
Though LOW continues to claim that this business alliance with Rona would create more economic and commercial benefits and is in the best interests of all shareholders, Rona’s Board believes that the proposal was not in the best interests of shareholders.
Rona is one of Canada’s largest networks of hardware and lumber stores and it was completely supported by the Quebec government. Right after Rona announced the rejection of LOW’s proposal, Quebec Finance Minister, Raymond Bachand quoted that the province may take necessary steps to prevent the takeover by LOW and Rona’s biggest shareholder Montreal-based Pension Fund immediately increased its stake from 12% to 14% to avoid hostile takeover.
Lowe’s is a Fortune 100 company involved in Home improvement supplies since 1946, with 1745 stores in US, Canada and Mexico. Management has quoted that Lowe’s will still be committed to the Canadian market.
As per the latest released quarterly results of Lowe’s for the period ending August 3rd 2012, net revenues decreased marginally by 2% to $14.25 billion from that of $14.54 billion in last July 2011. Net Income was at $0.75 billion. Its total assets were worth $35.03 billion including $1.7 billion as cash and its equivalents. Its total liabilities were $20.21 billion among which 45% were current and the remaining were long term. Total shareholders were at $35.03 billion.
Lowe’s shares opened today at $29.49, slightly higher than its previous close of $29.4 and have been trading volatile today in the range of $29.275 and $29.75. It reached its 52-week high of $32.29 in May 2012 and has been trading currently much above its 52-week low of $18.53.
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