rona issues statement regarding interest expressed by us

PRESS RELEASE
FOR IMMEDIATE RELEASE
RONA ISSUES STATEMENT REGARDING INTEREST EXPRESSED BY
U.S.-BASED LOWE’S COMPANIES, INC.
Boucherville, Quebec, July 31, 2012 – RONA inc. (“RONA” or the “Corporation”)
(TSX: RON, RON.PR.A), the largest Canadian distributor and retailer of hardware, renovation
and gardening products, confirms that its Board of Directors has unanimously determined that an
unsolicited, non-binding acquisition proposal recently received from U.S.-based Lowe’s
Companies, Inc. (“Lowe’s”) is not in the best interests of RONA and its stakeholders.
The Board believes that in the best interests of RONA and its stakeholders, the Corporation
should remain focused on executing its business plan with a view to capturing significant
opportunities that it sees for its business.
With a view to ensuring market transparency, RONA believes that it is important for its
shareholders and other stakeholders to be made aware of these developments.
RONA’s Board carefully considered Lowe’s non-binding proposal
On July 8, 2012, RONA received an unsolicited, non-binding proposal from Lowe’s to acquire all
of RONA’s issued and outstanding shares at a price of $14.50 per share.
Following receipt of the non-binding proposal, RONA’s Board of Directors and a special
committee of independent directors, with the assistance of Scotiabank and BMO Capital Markets
as their financial advisors and Norton Rose Canada LLP and Davies Ward Phillips & Vineberg
LLP as their legal advisors, commenced a review and evaluation of Lowe’s non-binding proposal.
On July 26, 2012, RONA informed Lowe’s that RONA’s Board of Directors and special committee
had met on several occasions and had carefully reviewed and considered Lowe’s unsolicited
expression of interest with its financial and legal advisors, and that the Board of Directors of
RONA had unanimously determined that Lowe’s proposal is not in the best interests of RONA
and its stakeholders. RONA’s strategic focus remains to execute on its business plan with a view
to capturing the significant opportunities that it sees for the business.
In its July 8 proposal, Lowe’s indicated that it had held discussions with a number of shareholders
of RONA and proposed entering into a board-supported transaction. In light of these statements,
RONA requested that Lowe’s confirm that it would not pursue a transaction that was not
supported by RONA’s Board. On July 28, 2012, Lowe’s responded that it was still its desire to
proceed with a board-supported transaction. Lowe’s also indicated that it remained very
interested in pursuing a transaction with RONA and was going to consider all of its options.
RONA will provide further updates to the market as and when circumstances warrant.
About RONA
RONA is the largest Canadian distributor and retailer of hardware, home renovation and
gardening products. The Corporation operates a network of close to 800 corporate, franchise and
affiliate stores of various sizes and formats under several banners, and a network of 14 hardware
and construction materials distribution centres which are flexible and perfectly adapted to the
diverse needs of its clientele. RONA is also a leader in the specialized plumbing and HVAC
market, primarily serving commercial and professional customers with a network of close to 60
sales outlets and four distribution centres across the country.
In total, RONA supplies nearly 1,500 sales outlets, of which some 840 are under one of its
banners, as well as close to 600 clients, independent dealers, in its distribution network. With
close to 30,000 employees working under its family of banners in every region of Canada, the
RONA store network generates consolidated sales of $4.8 billion and over $6 billion taking into
account the total impact of the retail sales of franchise dealers, affiliates and other independent
dealers who buy their supplies at RONA. For more information, please visit rona.ca
Contacts:
Media
Michelle Laberge, Senior Director
Communications and Public Affairs
RONA inc.
514-599-5114
michelle.laberge@rona.ca
Financial Community
Stéphane Milot
Senior Director, Investor Relations
RONA inc.
514-599-5951
stephane.milot@rona.ca
RONA: An important driver
for the Quebec regions
14,661 EMPLOYEES
343 STORES
Corporate and
franchised stores
Affiliated
stores
Affiliated
stores
8,052
253
4,944
Franchised
stores
1,241
Administrative
centres
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Abmast
CBV inc.
Duchesne et Fils
Garant
Jardins Paquette
Les Bois Martek
Les moulures Boulanger
Luxo Marbre
Soleno
Techniseal
Venmar
73
424
Distribution centres
Boucherville and Terrebonne
Corporate stores
RONA’S MAIN SUPPLIERS
EMPLOYS MORE THAN 33,000
PEOPLE IN QUEBEC
47% OF PRODUCTS SOLD BY RONA
COMES FROM QUEBEC COMPANIES
Companies
17
Cities
% of sales to RONA
(between 20% and 75%)
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St-Hyacinthe
St-Étienne-des-Grès
Yamachiche
St-François, Montmagny
Sutton
Grand-Mère
Warwick
St-Rémi
St-Jean-sur-Richelieu
Candiac
Drummondville
TOTAL BENEFITS OF MORE
THAN $2 BILLION
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Purchasing products
Marketing
RONAdvantages Program
Information technologies
Corporate investments
Dealers investments
Transportation and logistics
Acquisitions
Million $
1,548
79
171
29
78
40
26
46
2,017
RONA: Responsible and at the vanguard
in sustainable development
OUR ENVIRONMENTAL POLICIES
•
•
•
•
•
•
Forest Products Procurement Policy (2008)
Policy on the Sale of Pesticides across stores from the RONA network (2008)
Policy on Plastic Shopping Bag (2009)
Responsible Procurement Policy (2010)
Paper Products Use and Procurement Policy (2011)
Sustainable Policy Packaging (2011)
CLOSE TO $3 MILLION ANNUALLY
RONA’S CONTRIBUTION
RONA’S EMPLOYEES CONTRIBUTION
 Maison du développement durable
 Vélotour au profit de la Sclérose en plaques
 Vélotour Sclérose en plaques
 Centraide
 Cepsum
 Marche de la mémoire RONA au profit de la Société
 Croix-Rouge
 RONA Foundation
d’Alzheimer
 Fondation du cancer du sein
 Roulons pour le diabète juvénile
RONA: An important driver of economic
development in Canada
838 STORES UNDER
DIFFERENT BANNERS
28,858 EMPLOYEES
Corporate and
franchised stores
RONA affiliated
stores
19,127
7,533
Affiliated
stores
Corporate stores Commercial and
professional
RONA franchised
stores
352
55
19
172
240
1,399
Distribution centres
Administrative
centres
+ 579 CUSTOMERS (INDEPENDENT DEALERS)
OF OUR DISTRIBUTION CENTRES
84 % OF PRODUCTS SOLD BY RONA
COMES FROM CANADIAN COMPANIES
RONA is a strategic customer for many
suppliers across the country and
represents an important part of sales for
the companies listed below
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Quadra Wood, Abbotsford, CB
Plasti-Fab Ltd., Calgary, AB
Expocrete, Saskatoon, SK
Barkman Concrete, Strenback, MB
Total Forest, Guelph, ON
Aluminart Products Ltd, Brampton, ON
Garant, St-François Montmagny, QC
Duchesne et Fils, Yamachiche, QC
Imperial Manufacturing Group, Richibuctou, NB
Acan Windows, Paradise, NL
TOTAL BENEFITS OF MORE
THAN $3.3 BILLION
TRU affiliated
stores
RONA, Réno-Dépôt
and TOTEM corporate
stores
799
RONA’S MAIN SUPPLIERS EMPLOYS
CLOSE TO 80,000 CANADIANS
RONA’s 10 largest suppliers represent a
purchasing volume of $687 million, or 25%
of our Canadian purchases
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Tolko Marketing and Sales, Vernon, BC
CanWel Building Materials, Vancouver, BC
AFA Forest Products, Bolton, ON
Taiga Forest, Boucherville, QC
Akzo Nobel Canada, Longueuil, QC
BP Canada, Lasalle, QC
Moulding and Millwork, Montréal, QC
Goodfellow, Delson, QC
Ceramic Mono Serra Canada, Anjou, QC
AllGuard Wood Products, Lachine, QC
Purchasing products
Marketing
RONAdvantages program
Information technologies
Corporate investments
Dealers investments
Transportation and logistic
Acquisitions
Million $
2,804
130
171
40
78
50
26
46
3,345
RONA: Responsible and at the vanguard
in sustainable development
OUR ENVIRONMENTAL POLICIES
•
•
•
•
•
•
Forest Products Procurement Policy (2008)
Policy on the Sale of Pesticides across stores from the RONA network (2008)
Policy on Plastic Shopping Bag (2009)
Responsible Procurement Policy (2010)
Paper Products Use and Procurement Policy (2011)
Sustainable Policy Packaging (2011)
CLOSE TO $4 MILLION ANNUALLY
RONA’S CONTRIBUTION










Maison du développement durable
Vélotour Sclérose en plaques
Cepsum
Croix-Rouge
Fondation RONA
Chaire en éthique HEC
Ensemble avec nos athlètes
Société d’Alzheimer
Fibrose kystique
Fondation Marie-Vincent
RONA’S EMPLOYEES CONTRIBUTION
 Vélotour au profit de la Sclérose en plaques
 Centraide
 Marche de la mémoire RONA au profit de la Société
d’Alzheimer
 Fondation du cancer du sein
 Roulons pour la recherche sur le diabète juvénile
 Ride to Conquer cancer
 Société canadienne du cancer
 Cyclo-défi et week-end pour vaincre les cancers féminins
 Children’s Aid Foundation
 Langley Food Bank Support
 Habitat for Humanity
FACT SHEET
RONA is the largest Canadian distributor and retailer of hardware, home renovation and
gardening products. The Corporation operates a network of close to 800 corporate, franchise
and affiliate stores of various sizes and formats under several banners, and a network of 14
hardware and construction materials distribution centres which are flexible and perfectly
adapted to the diverse needs of its clientele. RONA is also a leader in the specialized plumbing
and HVAC market, primarily serving commercial and professional customers with a network of
close to 60 sales outlets and four distribution centres across the country.
In total, RONA supplies nearly 1,500 sales outlets, of which more than 830 are under one of its
banners, as well as close to 600 clients, independent dealers, in its distribution network. With
close to 30,000 employees working under its family of banners in every region of Canada, the
RONA store network generates consolidated sales of $4.8 billion and over $6 billion taking into
account the total impact of the retail sales of franchise dealers, affiliates and other independent
dealers who buy their supplies at RONA. For more information, please visit rona.ca.
2011 SALES BREAKDOWN BY SECTOR OF ACTIVITIES
25%
2011 FINANCIAL RESULTS SUMMARY
Fiscal years ended
December 25, 2011
December 26, 2010
4,804.6
4,819.6
Revenues
75%
240.6
336.3
(95.8)
(28.5%)
269.2
336.3
(67.1)
(20.0%)
5.01%
5.60%
Net earnings (loss) attributable to participating shares
Net earnings (loss) attributable to participating shares
(excluding unusual items)
Net earnings (loss) diluted per share ($)
Net earnings (loss) diluted per share ($)
(excluding unusual items)
45%
24%
Cash flow from operating activities
6.98%
6.98%
2011 CANADIAN MARKET SHARE
16%
13%
2%
‐
‐138 b.p.
(223.8)
‐
86.9
137.4
(50.5)
(36.8%)
(0.66)
1.05
(1.71)
0.66
1.05
(0.39)
(37.1%)
230.2
138.1
92.1
66.7%
A HEALTHY BALANCE SHEET
$1,115M
Retained earnings
or others
$674M
$450M
$771M
Share capital
Shareholders’ equity
‐197 b.p.
137.4
19%
50%
‐
(86.4)
$1,886M
2%
(0.3%)
EBITDA (excluding unusual items)
EBITDA margin (excluding unusual items)
29%
(15.0)
% change from 2010
EBITDA
EBITDA margin
2011 SALES BREAKDOWN BY REGION
$ change from 2010
Total net debt
Unused credit facilities
‐
A UNIQUE BUSINESS MODEL
MULTIPLE STORE FORMATS
BIG‐BOX
STORES
PROXIMITY
STORES
SATELLITE
STORES
THE STRENGTH OF OUR NETWORK
(MULTIPLE OWNERSHIPS, MULTIPLE BANNERS)
352
240
172
55
704
79
AFFILIATES
CORPORATE
AFFILIATES
19
COMMERCIAL AND FRANCHISES
PROFESSIONAL
2012 BUSINESS PLAN: NEW REALITIES, NEW SOLUTIONS
The RONA’s 2012 business plan acknowledges the need to adapt the offering in our industry to the new expectations and changes in consumer behaviour of many THREE FINANCIAL PRIORITIES
consumers. For a number of years RONA has foreseen the emergence in the market of
proximity stores that meet the demands of consumers who want a higher level of
1. IMPROVE EFFICIENCY
service. RONA pioneered in this area by reinventing the proximity store in the early 2. OPTIMIZE CAPITAL STRUCTURE
2000s, and these stores have been a great success. This new plan capitalizes on our 3. INCREASE RETURN ON CAPITAL
ongoing research into consumer expectations and behaviours, as well as our continual
experimentation with new store formats and new retail sales approaches. It combines
the best of these developments in a new proximity store format. The new approach brings us closer to Canadian consumers while taking into account the new social and economic realities they are facing.
The plan will provide important leverage in improving our return on capital, as it will generate an estimated annualized contribution to EBITDA of $10 million starting in the fourth quarter 2012, more than $30 million for fiscal 2013, and will achieve its full potential of more than $40 million starting in 2014.
The program is composed of three major areas, and cross‐functional teams are already working on them:
1. Introducing, in Spring 2012, a new integrated digital platform, which includes the new Web site rona.ca, to orient each different type of consumer with their renovation projects and support all of our retail activities.
2. Rolling out the new proximity store concept under the RONA banner, combining the strengths of the TOTEM model with best practices in RONA’s proximity stores, in 20% of the RONA corporate store network.
3. Continued development of the commercial and professional segment by optimizing recent investments, opening 9 new complementary sales outlets and seeking out potential acquisitions in this still very fragmented market.
FOR FURTHER INFORMATION
FINANCIAL COMMUNITY
Stéphane Milot, Senior Director of Investor Relations
Telephone: 514‐599‐5951 ‐ Email: invest@rona.ca
MEDIA
Michelle Laberge, Senior Director of Public Affairs and Communications
Telephone: 514‐599‐5114 – Email: michelle.laberge@rona.ca
www.rona.ca
This Fact Sheet includes “forward‐looking statements” that involve risks and
uncertainties. All statements other than statements of historical facts included in this
Fact Sheet, including statements regarding the prospects of the industry and
prospects, plans, financial position and business strategy of the Corporation may
constitute forward‐looking statements within the meaning of the Canadian securities
legislation and regulations. Investors and others are cautioned that undue reliance
should not be placed on any forward‐looking statements. The forward‐looking
statements in this Fact Sheet reflect the Corporation’s expectations as at July 13,
2012, and are subject to change after this date. The Corporation expressly disclaims
any obligation or intention to update or revise any forward‐looking statements,
whether as a result of new information, future events or otherwise, unless required
by the applicable securities laws. For more information on the risks, uncertainties and
assumptions that would cause the Corporation’s actual results to differ from current
expectations, please also refer to the “Risks and uncertainties” section in RONA’s
annual report.