A takeover of Quebec-based Rona by Lowe's is unlikely in the near future, the head of the U.S. home improvement giant said Monday in remarks that appeared to acknowledge obstacles the proposed transaction faces in Canada.
"First and foremost, an acquisition is not imminent," chairman, president and CEO Robert Niblock said during a conference call to discuss Lowe's second-quarter results, which missed expectations.
"We are evaluating our options and part of that evaluation, among other things, is whether or not we can complete due diligence and ensure a fair price and an adequate return on our investment," he told analysts. However, Niblock added that "based on publicly available information, we believe that an acquisition of Rona would provide us with an opportunity to immediately and significantly expand our Canadian presence."
Should the transaction eventually go ahead, Niblock noted the decision earlier this year by Lowe's to change its organizational design to provide for a separation of management into U.S. and international operations. "We made this decision in recognition that our U.S. and international businesses are in different stages of maturity, with market and cultural differences that require different approaches," he said.
The world's secondbiggest home improvement retailer has so far been thwarted in its unsolicited $1.76-billion takeover bid for Rona Inc., Canada's largest home-improvement chain.
The Montreal-area company revealed the approach on July 31 and rejected it, saying the $14.50 Cdn per share offer undervalues the company. The Quebec government also criticized the bid as not in the best interests of either the province or Canada and said it was examining ways to counter the offer.
Lowe's posted a 10 per cent drop in second-quarter net income, missing Wall Street's expectations, as the company was hurt by the timing of its revenues and a charge tied to job cuts.
