Rona Inc named a new executive chairman and reshuffled its board on Monday as part of a deal with its top shareholders that will help the Canadian hardware retailer and distributor avoid a potentially bruising proxy battle.
The move comes just a few months after Rona, Canada's top distributor of hardware, home renovation and gardening products, rebuffed an unsolicited C$1.8 billion ($1.81 billion) takeover proposal from US-based Lowe's Cos Inc.
It could signal a greater willingness to consider a sale of the company, which has performed poorly against Lowe's and Home Depot Inc on its home turf, analysts said.
"We view today's announcement as favorable to Rona's stock," said Barclays Capital analyst Jim Durran in a note. "The changes could result in more receptive dialogue regarding potential divestitures, or outright sale of the company."
The board changes are a precursor to bigger changes at the company, Robert Chevrier, the new executive chairman, said in an interview with Reuters.
Chevrier said the company plans to sell certain non-core assets and make some "drastic moves" to address the bleed at its big-box stores.
Rona's Toronto-listed shares, which have fallen almost 20 percent from a 52-week high of C$14.49, closed more than 3 percent higher at C$11.86 on Monday, following the reshuffle.
Chevrier, the former chairman of distributor Richelieu Hardware, replaces Robert Pare, who remains a board member.
The change is the second step in an overhaul that began late last year when Rona sacked long-time Chief Executive Robert Dutton and said it would sell assets and simplify operations.
Rona has grown rapidly in the last three decades through a series of acquisitions but stumbled in recent years as Home Depot and Lowe's, respectively the world's No. 1 and No. 2 home improvement chains, have stepped up competition in the Canadian market.
Rona, based in Boucherville, Quebec, also named four other new board members on Monday, following an agreement with its two top shareholders; Quebec's public pension fund manager Caisse de depot et placement du Quebec, and fund manager Invesco Canada.
Invesco had publicly backed Lowe's bid for Rona, which was withdrawn in September in the face of opposition from Rona's board, provincial politicians in Quebec and from many of Rona's independent dealers. Caisse took no public position on the deal except to announce a marginal increase in its Rona shareholding.
In November, Invesco publicly called for the removal of Rona's board and outlined plans to requisition a shareholder meeting. Invesco, however, had