US Lowe’s buys out RONA

It is causing a storm of concern in Canada, and especially Quebec.

It is a major news story across Canada as one of country’s biggest hardware and home improvement chains, RONA is being taken over by a US giant, Lowe’s.

RONA began in Quebec in 1939 when a group of hardware stores came together to combat a monopoly threat to their own supply chain.

The chain expanded greatly from the 1960’s onward to now become a major distributor and retailer in the country with over 500 stores, and over 20,000 employees at it’s own and affiliate stores. Many other Canadian jobs depend on RONA peripherally through the giant chain’s Canadian suppliers.

The US hardware giant Lowe’s announced a $3.2 billion friendly takeover today

Threat to Canadian jobs.

The mostly French-speaking province of Quebec considers this one of its own success stories and is quite proud of the brand name, To now theoretically “lose” it to an American giant has come as a surprise and concern to Quebec residents and especially to employees, the chain’s many Quebec and Canadian suppliers, and some politicians.

In 2012 Lowe’s had attempted a takeover but it was disallowed by the then Quebec provincial government of Jean Charest and his finance minister, Raymond Bachand, saying the sale wasn’t in Quebec’s or Canada’s best interests adding that it was a threat to Canadian jobs.

Lowe’s has agreed its Canadian headquarters will be in Boucherville, Que., and said it will maintain Rona’s multiple retail store banners. RONA’s employees and suppliers are concerned © Ryan Remiorz/Canadian Press

In announcing the sale, Lowe’s has said it will maintain the RONA headquarters in Boucherville Quebec, and the chain’s retail store banners. Robert Chevrier, RONA’s chairman, in a statement said it was a good deal, and would offer RONA’s (Canadian) suppliers potential new markets.

Some however are unconvinced saying there will certainly be job losses, especially in Ontario where Lowe’s already has several stores, that control will shift to the U.S., and Canadian suppliers may be shut out to the benefit of Lowe’s US suppliers and it’s US supply base.

The news of the takeover has P. K. Peladeau, leader of the Quebec provincial opposition party, Parti Quebecois, joining others criticizing the sale. In a tweet to the current provincial Liberal government he wrote, “”A first test for [Dominique Anglade]: Will she intervene or let Quebec lose another company headquarters. Will she resist her own premier,” (Première épreuve de @DomAnglade Interviendra ou laissera-t-elle perdre un autre siège social. Résistera-t-elle à son PM ? #polqc ) Ms Anglade recently assumed the role of minister of the economy in a cabinet shuffle last week.

In another tweet to the current Quebec Premier and Liberal leader Philippe Couillard, he said, “”Jean Charest and his minister Raymond Bachand defended Rona, and Philippe Couillard folds again. No plan for Quebec” ( Jean Charest et son min Raymond Bachand avaient défendu Rona. P. Couillard s’écrase encore. Pas de plan pour le Qc.http://ici.radio-canada.ca/nouvelles/economie/2016/02/03/001-rona-lowes-achat-quebec-etats-unis.shtml )…

When questioned by reporters about the sale, several provincial and federal politicians have said it is simply a case of a free market transaction and have not expressed any undue concern.

Partial list of some of the many other US takeovers of major iconic Canadian operations include

Tim Hortons coffee/doughnuts etc (Wendy’s Int’l-1995- later spun off)

Hudson’s Bay (Canada’s oldest company) (NDRC Equity-2008, later spun off)

Molson brewery (Coors 2005)

Eaton’s Department stores (Sears 1999)

Canada Goose (winter wear- Bain Capital 2013)

Imperial Oil ( 70% Exxon)

Dollarama ( 80% Bain Capital 2004)

Stelco (100 yr as Cdn steel company, US Steel 2007, idled 2008, closed 2013)

CCM (sports gear- Reebok 2004)

Bauer: Cooper: Hespeler (hockey equipment brands- Nike 1994)

Corel (software- Vector Capital 2003)

MacMillan Bloedel (forestry- Weyerhauser 1999)

CP Hotels/Fairmont (Colony Capital-US and Kingdom Holding-Saudi Arabia-2006)

ATI Technologies (graphics chips- Advanced Micro Devices-2006

Several other major iconic Canadian companies have been bought out by firms in other countries.

Additional information- sources