Rona Advances as Investor Invesco Eyes Board Changes
Rona jumped 4.9 percent to C$11.52 at the close in Toronto, its biggest jump since Nov. 9, the day Rona’s board ousted former Chief Executive Officer Robert Dutton, who was at the company’s helm when it rejected a C$14.50-a-share offer from Lowe’s, the second-biggest U.S. home-improvement chain.
Invesco Canada, the Toronto-based fund company and Rona’s second-largest investor, said it plans to request a shareholder meeting to elect new directors. Dutton’s ouster came after Boucherville, Quebec-based Rona’s profit growth slowed and its stock slumped. The company’s shares had plunged 48 percent in the five years through Nov. 8.
“You have to rhetorically ask the question, what the board was thinking refusing to even speak with Lowe’s,” said Irwin Michael, a portfolio manager at Toronto-based ABC Funds, Rona’s third-largest shareholder. “Hopefully change, or the threat of change will bring in new positive developments for shareholders,” he said by telephone.
Rona may have lost market share to U.S. competitor Home Depot Inc. (HD) in the third quarter as the latter saw sales grow at stores open at least a year, while Rona’s fell, Jim Durran, an analyst at Barclays Capital, wrote in a note Nov. 13.
Rona’s franchise is “deteriorating” and without Dutton it is “rudderless,” Michael said. The fund manager said he would need to see Invesco’s proposed board before supporting it.
“We support change, we look forward to seeing who is proposed on that new board of directors slate that Invesco has announced today, and we’ll see where we go from there.”
Dominique Boies, Rona’s chief financial officer, will act as interim CEO until a successor is named, the company has said.
Lowe’s, based in Mooresville, North Carolina, withdrew its bid in September after opposition from Rona’s board and the Quebec government which called the company a “strategic asset.”
Rona hasn’t received an official request for a meeting, and will respond to Invesco’s announcement later today, Valerie Lamarre, a company spokeswoman said via e-mail today.
Caisse de Depot et Placement du Quebec -- Rona’s largest shareholder with about 18.2 million shares, or about 15 percent- - had no comment on Invesco’s announcement, Maxime Chagnon, a spokesman, said in an e-mail.
Wes Voorheis, a spokesman for Invesco, said the company had no comment beyond its initial statement.
Invesco Canada exercises control or direction over 12.4 million common shares of Rona, representing about 10 percent of outstanding shares, Invesco said today in a statement.
Chris Ahearn, a Lowe’s spokesman didn’t immediately respond to two calls left at his office.
Invesco Canada operates funds under the Trimark and other brands, and is a unit of Invesco Ltd. (IVZ) of Atlanta.
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