MONTREAL – Home reno retailer Rona Inc. wrapped up what could be its last year as a Canadian-controlled company by beating expectations on higher sales within the fourth quarter, though one analyst says this matters little to shareholders as the clients are poised to simply accept an ample takeover offer from U.S. Lowe’s Cos Inc.
“We are on the right track and that we continue to improve our network in strategic locations where individuals are not well with the neighborhood offer and where we see chance of market consolidation and powerful growth,” said Rona CEO Robert Sawyer within an analyst conference call Tuesday.
“Having said this, before the expected closing of the announced transaction with Lowe’s, we’ll still focus on the execution of our strategic business plan and also the realization of our financial objectives.”
The Boucherville, Que.-based firm said it were built with a net income of $21.Two million or 20 cents per share in the 13 weeks ended Dec. 27, compared to $17.3 million or 15 cents per share a year earlier. Rona also boasted its sixth consecutive quarterly rise in same-store sales.
For the entire year, net profits decreased to $68.05 million from $78.25 million. Excluding restructuring along with other costs, adjusted net gain grew to $261.7 million from $235.4 million in 2014.
Rona said a great performance in Ontario and British Columbia together with warmer climate conditions prolonged the building and renovation season in a number of parts of the country, offsetting challenging economic conditions in Alberta and also the Atlantic provinces.
“The disciplined execution of our merchandising plans and strategic network expansion yielded positive results, despite the uncertain economy, ongoing competition and difficult market conditions in some regions,” said Rona CEO Robert Sawyer.
BMO Nesbitt Burns Inc. analyst Peter Sklar asserted, as the performance slightly exceeded expectations, the results are not relevant given the $3.2-billion friendly takeover offer from the U.S. do it yourself giant Lowe’s.
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In Feb. 3, Rona entered into an deal under which Lowe’s decided to acquire all the issued and outstanding common shares at a cost of $24, representing a premium of 104-per-cent premium to the closing share price each day earlier.
It can also be 38 percent above Rona’s 52-week high price of $17.36 per share.
Sklar rated the results as “slightly positive,” having a target cost of $24 to mirror the Lowe’s offer.
“We continue to anticipate the transaction will proceed at the $24.00 per share offer price,” he said in a note to clients.
On the Toronto Stock market, the outcomes hardly moved the needle: Rona moved up just 0.17 percent to $23.47 by 12:14 p.m. Tuesday.
When the Lowe’s offer was announced, however, the stock rocketed from $11.77 to $23.30.
The transaction continues to be authorized by the boards of both companies, although it is susceptible to shareholder approval.
Shareholders is going to be inspired to vote on the transaction between Lowe’s and Rona during a special meeting on March 31, and can require the approval of 66.66 percent of common shareholders.
After the meeting, when the vote passes Rona will need the approval of Canada’s Competition Bureau and qualify set out under the Investment Canada Act governing foreign ownership.
Dvanderlinde@nationalpost.com
Twitter.com/DamonVDL
