Lowe's Cos. agreed to buy rival Rona Inc. for $3.2 billion in cash to create one of Canada's biggest home-improvement retailers.

Lowe's will pay C$24 per share in cash, it said in a statement, more than double yesterday's closing price of C$11.77. It agreed to pay C$20 for the Boucherville, Quebec- based company's preferred shares. The boards of both companies approved the planned transaction.

The transaction will create a company with about C$5.6 billion in annual revenue that will seek to capture a greater share of Canada's growing home-improvement industry, worth more than C$45 billion, Lowe's Chairman and Chief Executive Robert Niblock said in the statement. Lowe's has identified more than C$1 billion of opportunities to further increase revenue and operating profitability in Canada, where it could double operating profitability in five years, according to the statement.

CIBC World Markets Inc. and RBC Capital Markets advised Lowe's. Stikeman Elliott LLP served as legal counsel to Lowe's in Canada, while Hunton & Williams LLP did so in the U.S. Scotia Capital Inc. was Rona's financial adviser and Norton Rose Fulbright Canada LLP its legal counsel.