MONTREAL — Rona Inc. offered to acquire the Canadian operations of Lowe’s, years before it was gobbled up by the American giant, according to an autobiography by the home improvement retailer’s former CEO.
Robert Dutton said he first offered to buy Rona’s competitor during a meeting with Lowe’s senior management at a restaurant in Old Montreal on July 27, 2011 when they shared the difficulties the hardware chain was having breaking into the Canadian market.
“We could buy their Canadian stores before they’re still dumping huge sums of money into a development that is slower, more expensive and more difficult than they expected,” he wrote.
“We are open to a scenario that allows them to consolidate a presence in the Canadian market through a large but unregulated share in Rona’s share capital.”
Lowe’s tune changed at a second meeting a couple of weeks later, Dutton wrote, when they indicated an interest in buying Rona’s big box stores and seemed to be in a hurry.
Lowe’s was initially not interested in Rona’s small stores, something Dutton thought was unrealistic.
So, Dutton said he proposed to buy all of Lowe’s profitable stores in Canada and offered the American giant a minority stake in Rona. But the meeting ended badly, and Dutton left feeling that Lowe’s would try to get its hands on Rona with the support of key shareholders.
To counter a possible hostile bid, Dutton approached several large Rona shareholders, including the Caisse de depot et placement du Quebec, Investissement Quebec, the Quebec Solidarity Fund and franchised merchants, to unite in blocking the takeover bid in 2012.
Lowe’s would return and make its successful bid four years later.
By that time, obstacles had disappeared.
Dutton had been fired, the board was controlled by Ontarians and the blocking minority collapsed when the provincial government’s investment agency sold its nine-per-cent stake in Rona, a move Dutton said he could not explain.
The long-time former CEO said it was unlikely that move was an investment decision made on a purely financial basis, implying that the government and Quebec’s pension fund manager were aware of the impact on the Quebec-based retailer.
“We are not in a scenario of ‘oops! I just dismantled a blocking minority, I did not do it on purpose,’” he wrote.
Dutton said the government could have tried to find investors interested in preserving Rona, if it wasn’t Investissement Quebec’s mandate to retain a large stake in a publicly traded company
But he has the impression that the board, the Caisse, Investissement Quebec and the government were not interested in protecting Rona.
“This will was lacking.”