RONA inc. (TSX: RON, RON.PR.A) announces it has signed a letter of intent to acquire the 20 franchise stores in its network, 17 big-box stores and three proximity stores, operating under the banners RONA, RONA L’entrepôt and RONA Home & Garden. The stores, 18 in Quebec and two in Ontario, have a combined workforce of 2,600 employees and generate over $500 million in retail sales.
“This transaction is in line with our ongoing recovery and banner repositioning plan launched just over a year ago. By consolidating these stores, we will be able to simplify our business model and focus on the sales of our independent dealers, who operate over 275 affiliated stores across Canada, and on our network of corporate stores.
We are excited about pursuing the development of the stores affected by this transaction, which occupy an enviable position in their respective regions. I thank the franchise owners for their contribution to the success of the businesses involved and for their tremendous work over the past two decades and we are counting on the cooperation of the current employees in maintaining these stores’ success,” said Robert Sawyer, President and CEO of RONA.
The network of 79 big-box stores across Canada will now be wholly owned by RONA.
The closing of this transaction is conditional on a due diligence review of the business of each of the stores, to RONA’s satisfaction, and on the negotiation and signing of agreements to purchase and related documentation by RONA and each of the sellers, subject to the approval of RONA’s Board of Directors and the customary regulatory approvals. The acquisition will be funded by RONA’s cash flow from operations and credit facility and will contribute to profits in its first year.