RONA gains firm foothold in the Atlantic by proceeding with the acquisition of Chester Dawe Limited
20 February 2006
RONA Inc. ("RONA" or the "Company") (TSX: RON) , the leading Canadian distributor and retailer of hardware, home improvement and gardening products, continues the consolidation of the home improvement market by acquiring 100% of the operating assets of Newfoundland-based Chester Dawe Limited ("Chester Dawe"). Chester Dawe Limited is the market leader in the sales of building materials and hardware products for the housing industry in the St. John's Metro area and a major supplier throughout the entire province.
The transaction, financed by RONA's existing credit facilities, is subject to usual conditions and regulatory approvals. The deal is expected to close at the end of February 2006. Chester Dawe Limited is a private company founded in 1945 at St. John's by Chester Dawe. It has been managed since 1992 by Philip M. Budden and owned since 2001 by P.M.B. Development Limited.
Chester Dawe Limited operates eight retail outlets: three in St. John's and one each in Goulds, Clarkes Beach, Kelligrews, Gander and Fortune. The store network consists of approximately 280,000 square feet of combined retail/warehouse space and some 25 acres of outside lumberyard storage. Chester Dawe also operates a roof and floor truss factory. During peak season, Chester Dawe employs close to 400 staff. Chester Dawe posted sales of approximately $80 million in 2005.
RONA believes that the acquisition of Chester Dawe will generate a number of significant strategic advantages:
- Provide the company with a solid foothold in Newfoundland and increase
its presence in the Atlantic Provinces, where it has held limited
market share until now.
- Make a positive contribution to earnings per share.
- Achieve recurring annual synergies proportionate to those achieved with
previous acquisitions.
- Accelerate the affiliate recruiting program in Newfoundland and the
three other Atlantic Provinces.
- Facilitate the construction of new stores in all major cities in the
Atlantic Provinces.
Robert Dutton, President and CEO of RONA, said that the transaction "fits perfectly into our business development plan. It gives us the critical mass we need in Newfoundland to be able to serve this market effectively. The efficiency of our distribution system and our growing reputation will provide considerable support for our recruitment program in this extremely dynamic market."
Philip M. Budden, General Manager of Chester Dawe Limited, is also pleased with the transaction. "We are happy to complete the sale of the operating assets of our company to a Canadian chain that understands how we go to market and one that will continue to serve all our customers in the Chester Dawe Limited tradition going back to 1945. RONA will provide our staff with further development and growth opportunities. Our customers will have an enhanced selection of products (including the RONA private label brand) and services at great prices. RONA's overseas buying offices will bring exciting new merchandise and outstanding pricing to Chester Dawe retail stores."
Mr. Budden will remain with the company as general manager and all employees will continue to work with RONA.
According to Mr. Budden, the sale will enable Chester Dawe Limited to continue to grow as a leading player in the residential subdivision business within the St. John's Metro area and throughout the province, providing contractors and home builders with improved and expanded services in the years ahead. "It will be business as usual," he concluded.
Forward-looking Information
This press release contains forward-looking statements reflecting RONA's objectives, estimates and expectations. Such statements may be marked by the use of verbs such as "believe," "anticipate," "estimate" and "expect" as well as the use of the future or conditional tense. By their very nature, such statements involve risks and uncertainty. Consequently, results could differ materially from the company's projections or expectations. Factors that could cause results to differ materially from statements include, among other things, the fact that the expected closing of the transaction referred to in this news release is subject to customary closing conditions and certain regulatory approvals. For information on the nature of risk factors not specifically discussed in this press release, the reader can consult RONA's 2004 Annual Report under the heading "Risks and Uncertainties," page 27. The Annual Report is available on RONA's website at www.rona.ca or on SEDAR at www.sedar.com.
ABOUT RONA
RONA is the largest Canadian distributor and retailer of hardware, home renovation and gardening products. RONA operates a network of some 580 franchise, affiliate and corporate stores of various sizes and formats. With over 24,000 employees working under its family of banners in all regions of Canada and more than 13 million square feet of retail space, the RONA store network generates $5 billion in annual sales.
For further information: Sylvain Morissette, National Director of Corporate Communications and Public Relations, RONA Inc., (514) 599-5123 or 1-877-599-5900 extension 5123, (514) 910-5123 Cellular Phone, mors@rona.ca; Stéphane Prud'homme, Public Relations Manager, RONA Inc., (514) 599-5114 or 1-877-599-5900 extension 5114, (514) 258-2693, prus@rona.ca; For more information on this acquisition, please visit www.rona.ca
Source: newswire
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