Rona to Sell Commercial Unit to EMCO for C$215 Million

Rona Inc., Canada’s largest home-improvement store chain, agreed to sell its commercial and professional unit to EMCO Corp. for C$215 million ($207.8 million) as it focuses on its retail operations.

The sale will result in a pretax loss of about C$125 million, mostly to write down the division’s goodwill, Boucherville, Quebec-based Rona said today in a statement.

Chief Executive Officer Dominique Boies has been trying to boost profit by cutting jobs and selling underperforming units while reinvesting in stores. The commercial business, which Rona acquired in its 2007 purchase of Noble Trade Inc., sells plumbing, heating and air-conditioning systems to contractors under the Noble, Don Park and MPH Supplies names.

“We need to focus on what’s really core,” Boies said in a telephone interview from Toronto. “Noble represented a low contribution to overall sales, and this transaction frees up capital to Rona.”

The C$215 million from the sale initially will be used to pay down debt, Boies said.

EMCO, based in London, Ontario, will add the unit to its Talisker Plumbing Corp. subsidiary.

Rona fell 1.4 percent to C$10.10 at 10:54 a.m. in Toronto. The shares had dropped 4 percent this year through yesterday, compared with a 1.3 percent decline for the Standard & Poor’s/TSX Composite Index.

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