RONA INC.
TSX : RON

RONA INC.

June 16, 2010 08:45 ET

RONA Expands Development in Atlantic Provinces With Acquisition of Piercey's: 5 Stores Totalling 185,000 Square Feet

BOUCHERVILLE, QUEBEC--(Marketwire - June 16, 2010) - RONA inc. (TSX:RON), the largest Canadian distributor and retailer of hardware, renovation and gardening products, has acquired the chain of Piercey's stores. Owned by the Bragg Group, Piercey's operates five hardware stores ranging in size from 17,000 to 69,000 square feet, major lumberyards and one of the biggest fleets of construction materials and hardware delivery trucks in Nova Scotia. Piercey's stores are strategically located around the Halifax region, where RONA has been operating a big-box store since April 2008. Also, Piercey's can count on more than 150 dedicated employees.

Subject to certain conditions, the transaction is expected to close on June 21, 2010. The transaction will be mainly financed by an offering of RONA treasury stock. The remaining portion will be financed by RONA's cash on hand. To avoid dilution for existing shareholders, RONA intends to redeem the same number of shares that will be issued in the market transaction using an issuer bid in the normal course of operations, which will be arranged within the next few days.

"We are very pleased with this acquisition, which reflects our intention to become the industry leader in every key region of the country. For RONA, this transaction represents another step toward achieving our goal of consolidating the Canadian market and growing our market share from 17.5% to over 20% by the end of 2011," said RONA president and CEO Robert Dutton.

"This chain of stores enjoys a very good reputation and has a well diversified customer base of do-it-yourselfers and renovation-construction professionals. It will generate major synergies with our network of 26 stores in the Atlantic Provinces, particularly our Halifax big-box store. The transaction will allow us to quickly expand RONA's positioning in the Atlantic Provinces through the organic growth of our store network, as well as recruitment activities among independent dealer-owners and the acquisition of other businesses in this part of the country," Dutton said.

David Hoffman, Co-CEO of the Bragg Group, the owner of Piercey's, expressed his satisfaction with the RONA agreement. "I believe this transaction will open up new development opportunities for employees and continues to give them an exciting work environment. Between the know-how of Piercey's employees and the customer-service focus of RONA, I am also convinced that our customers will continue to enjoy the top-quality service they've been used to for nearly 100 years. So we're very enthusiastic about the idea that our employees will be joining forces with RONA, a company with a solid financial foundation and an impressive development plan for the years ahead." David Hoffman and John Bragg said: "We are proud of the achievements of the management team and the many employees at Piercey's who had been a part of the Bragg Group during the past 21 years".

Piercey's meets all of RONA's strict acquisition criteria. RONA acquisitions must:

  • Have a good management team

  • Be profitable

  • Be accretive to RONA's earnings per share

  • Operate in a sector related to RONA's main activities, generating recurring annual synergies

  • Offer good growth potential

RONA ON THE RISE IN THE ATLANTIC PROVINCES

When the transaction closes, RONA will have 31 stores in the Atlantic Provinces – 12 in Nova Scotia, 10 in Newfoundland and Labrador, and nine in New Brunswick, for a total of 575,000 square feet of retail space. Over the past five years, RONA has rapidly expanded its presence in Atlantic Canada, notably with the acquisition of Chester Dawe in 2006 and Bishop's Building Center in 2008, and by opening new corporate stores and recruiting independent dealer-owners. In the last year, RONA also completed major renovations in two of its Newfoundland and Labrador stores. These growth initiatives have increased the number of RONA stores in the Atlantic Provinces from nine at the end of 2004 to 31 in 2010.

FORWARD-LOOKING INFORMATION

This press release includes "forward-looking statements" that involve risks and uncertainties. All statements other than statements of historical facts included in this press release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of the Company 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 Management Report reflect the Company's expectations as of June 16, 2010, and are subject to change after this date. The Company 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 Company's actual results to differ from current expectations, please also refer to the Company's Annual Report, under the "Risks and Uncertainties" section, available at www.sedar.com and at www.rona.ca.

ABOUT RONA

RONA is the largest Canadian distributor and retailer of hardware, renovation and gardening products. RONA operates a network of close to 700 corporate, franchise and affiliate stores of various sizes and formats. With over 30,000 employees working under its family of banners in every region of Canada and more than 16 million square feet of retail space, the RONA store network generates over $6 billion in annual retail sales. For more information, please visit www.rona.ca.

ABOUT PIERCEY'S

Since 1915, contractors and homeowners throughout central Nova Scotia have counted on Piercey's for their building materials. What started as one location has grown to five stores and one of the largest fleets of construction materials delivery trucks in the province. The locally owned business specializes in providing fast, courteous service, competitive prices, and expert advice in every department. For more information, please go to www.pierceys.ns.ca.

Contact Information

  • Media
    RONA inc.
    Daniel Richard
    Director, Communications and Public Affairs
    514-599-5900, ext. 5751
    daniel.richard@rona.ca
    or
    Financial community
    RONA inc.
    Stephane Milot
    Affairs Senior Director, Investor Relations
    514-599-5951
    stephane.milot@rona.ca