There was an announcement today that the number 2 home improvement company in the U.S. Lowe’s is making a friendly purchase of Rona in Canada for $3.2 billion. This is a familiar story as this courtship has been attempted before sometimes with the government of Quebec stepping in and saying no.
Rona is different than Lowe’s in that it has large corporate stores as well as very small dealer stores. It would appear that an offer was made that has satisfied both the corporation and government of Quebec. The cash offer is double the company and it appears that the Rona brand or style will be disappearing in the immediate future.
Last year Lowe’s announced they were building a store at Linden Ridge Shopping Centre. It is difficult to say how far along that process construction has began or whether that job will now be cancelled.
Manitoba, unlike every province in the west, has no Lowe’s yet. It would seem odd if the one store planned might be built just down the street from their latest acquisition. Lowe’s has 42 stores in Canada and it is certain that there will be more but details of how the combined Quebec-based corporation operates remains uncertain. It could be that Manitoba may not see for the Lowe’s format for some time to come.
The low Canadian dollar makes it possible for other U.S. retailers to expand into Canada and build their networks. However, it always makes it difficult for them sent profits back. Still, if the goal is to be around for the long haul, the investment can pay off very nicely with an operation that produces returns for decades to come. Rona looks to be that type of investment for Lowe’s.
This has been a guest editorial by John Dobbin.
To read more from John, visit his blog Observations, Reservations, Conversations
