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Independent merchants at 164 Rona (RON-T) stores across Canada are telling U.S. rival Lowe's (LOW-N) that they won't support its hostile takeover proposal for the company.
In a letter to Lowe's made public on Wednesday, the merchants laid out a case for why they believe a takeover would be incompatible with the company's operations.
"We want to reinforce your view that it may not be a good idea for you to buy RONA, after you appeared to state your doubts about the deal on Monday, while you were announcing your financial results," the letter says. "We respectfully say 'No, thank you' as we feel that Lowe's business model is incompatible with the one with which we have individually chosen to engage."
The letter comes weeks after Rona revealed it had received and rejected a nearly $1.8-billion unsolicited takeover proposal from Lowe’s in early July. Translating to $14.50 per share, the approach was a more than 30-percent premium to Rona’s closing price on July 6, the day before the intention was made.
Rona’s board said it formed a special committee to evaluate the bid and it “unanimously determined that Lowe’s proposal is not in the best interests of Rona and its stakeholders.”
The merchants say that what makes Rona "unique" is its business model, which combines 200 corporate stores with a network of more than 400 independent merchants.
"Each of us personally owns our hardware stores and we are very proud of that. We have strong bonds with our customers in our respective communities in all the regions of Canada. In many cases, we have done so for several generations,” the merchants said.
"In short: we are RONA shareholders. We are RONA's clients. We are the retailers who sell RONA's products. We know the retail sector; it is our trade. We know what our customers want and believe that the RONA product offering reflects that as well as local values across the country. It is for all these reasons that we decided to become part of RONA - above the other competition -and why we cannot support your planned hostile takeover," the letter says.