Should lowes buy Rona?
Posted in the Lowes Companies Forum
#1 Aug 4, 2012
This is going to be the biggest issue to hit the company in quite some time. The last buyout was Eagle a long long time ago.
I supposed this is the only way to really get into the Quebec market and dramatically expand coverage in the rest of Canada.
At the same point can the company really afford to expand in light of the economy and current debt loads? 800 stores and 30,000 new employees will not come cheap.
HD is already pretty active in canada so this would saturate the market if they bought them. If Menards tried I don't think it would work well since they are more regional and are a private company. Since Quebec owns a fair amount of Rona they'd want a public company to buy it.
I have a feeling this might end up being a hostile take over. Maybe the company could use this to cover up other possible store closings/layoffs. If Nilblock wants this he'll have to have the company pay more money,
This is what lowes has to say about this
Ironically as this story came out Rona shares have gone up significantly..which would add significantly to how much lowes has to pay to buy it.
Here's one story on it
This is what Rona says
Were disappointed, Liss said in a phone interview.Diverting their attention into Canada when you dont have your base stores where they should be, thats very frustrating for us as investors. They are just socking it to their shareholders.
Lowes can afford to buy Rona..but politically this might hurt since Quebec is pretty protectionist.This is probably the easiest way to create expansion given that Canada has a better housing market in the USA. Buying out menards would create saturization and the people that run it are freaking nuts anyway. Maybe it might create some openings if new manager have to go up north and it opens up positions domestically. Anyone know French :-p
#2 Aug 4, 2012
How would buying rona saturate the market? There would be the same number of stores. What would saturate the market would be foolishly expanding in Canada and trying to compete against depot and rona both. Buying rona gives us automatic market share. It's a big investment, but it IS an investment. Rona is making money. The plans for this have been in the works for years. The rona CEO visited the CSC several times to meet with niblock. The board is holding out for a better offer I would imagine. When the stock goes back to normal price, they might rethink it. If Canada passes laws to limit foreign investment like they've threatened, it might just stop the whole deal though, and ronas stock will suffer dramatically from missing their chance. They don't want to face more competition from lowes stores down the street either.
Since: Jul 12
#3 Aug 4, 2012
Lowes should not buy Rona. They are trying to use the money they stole from us. They have a joint venture in Australia with Woolworths, 1/3 ownership and the market is very different there, and newly aquired ATG. It would not surprise me after 2 years of losses growing 5.2% compared to HD at 26.5%,that we would have to file for bankrupcy in mid 2013.They are surely over reaching their capability.It is certianly desparate to take spiffs and commissions from employees after all the years and now our experienced assoc. are leaving in droves.New inexperienced employees certianly are not going to be as knowlegable and customers are going to see that resulting in sales losses.I bet the second quater is also going to be shown to be a loss. We will see what the next bunch of lies will be at the 26th meeting. P.S. 9 yrs with lowes.Jumping ship.>>>>> >>>>>>> >>>>>>> >>>>>>>
#4 Aug 4, 2012
We had an operating income of more than $17 billion and a net of $1.8 billion that went straight to the bank after all the investments in technology, buying ATG, etc. There will not be a bankruptcy any time soon. The savings from spiffs was a drop in the bucket. Glad to hear you are jumping ship though.
#6 Aug 5, 2012
I honestly think buying Rona would push our growth up. On the other hand, if it is a hostile takeover, Lowes should not waste their time with it.
I've seen the 26th meeting agenda, doesn't look secret at all.
#7 Sep 18, 2012
DMxMD. The Rona bid has been cancelled. Just assuming the Wall Street analysts know more than you do, they were concerned about: 1) the debt Lowes would need to incur for the takeover, 2) the feasibility of a successful and profitable consolidation, given Rona's large and small stores and franchisees opposed to the takeover, 3) and cultural obstacles.
It doesn't take that long for a company to bleed red, when it's being run by fools. A stupid attempt at a takeover will do it quite well.
#8 Sep 18, 2012
But the issue now is lowes has a harder time trying to hide debt. Maybe they'll try a jab at Kingfisher PLC next.
Lowe's expanded because new stores could bring profit and then dropped so constant expanding looked good.
How much should we bet that corporate says Q3 earnings were depressed due to this rejection?
#9 Sep 18, 2012
As always, they'll spin it til they win it - not a true future or profitability - just a bump in share price long enough for the Mooresville insiders to cash some more chips.
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