Rona Inc. (RON) jumped as much as 3.2 percent after the Quebec home-improvement retailer agreed with its two largest shareholders on a series of board changes that includes the hiring of a new executive chairman.
Rona gained 2.6 percent to C$11.80 at 11:32 a.m. in Toronto, after rising to C$11.87 earlier. The stock has risen five days in six and is the second biggest gainer today in Canada’s benchmark Standard & Poor’s/TSX Composite Index. (SPTSX)
Robert Chevrier, who until today served as chairman and director of Richelieu Hardware Ltd., is now Rona’s executive chairman, the Boucherville, Quebec-based company said today in a statement. Four new directors, including Bernard Dorval, former group head of insurance at Toronto-Dominion Bank, will immediately join the board under an agreement reached with Caisse de Depot et Placement du Quebec and Invesco Canada Ltd., the retailer said.
The shuffle comes two months after the departure of Chief Executive Officer Robert Dutton. Dutton was at the company’s helm when Rona rejected a C$14.50-a-share offer from Lowe’s (LOW:US) Cos., the second-biggest U.S. home-improvement chain. Invesco Canada last year backed Lowe’s in its bid for Rona.
Today’s announcement “suggests greater support by the board to proactively enhance shareholder value,” Jim Durran, an analyst at Barclays Plc’s investment bank unit in Toronto, said in a note to clients. “Given the support by Invesco and the Caisse, the changes could result in more receptive dialog regarding potential divestitures, or an outright sale of the company, in our opinion.”
Invesco Canada owns 10.2 percent of Rona’s outstanding shares, second only to the Caisse, which controls about 15 percent. Both investors have indicated they will support the election of the company’s full slate of director nominees at the next annual general meeting of shareholders on May 14, Rona said in today’s statement.
Rona also said today it will provide a detailed update of its “strategic priorities,” including specific action plans and key metrics, on its fourth quarter earnings presentation Feb. 21. The company hired an unidentified global management consulting firm to “accelerate progress” on the initiative.
The retailer plans to provide an update on its search for a new CEO before the end of next month. Chief Financial Officer Dominique Boies is now acting CEO.
Besides Dorval, new members of Rona’s board include Wesley Voorheis, partner at Voorheis & Co.; Guy Dufresne, former President and CEO of ArcelorMittal Mines Canada Inc.; and Barry Gilbertson, principal with Barry Gilbertson Consultancy. Alain Michel and Patrick Palerme quit the board, effective immediately, “to allow for its reconfiguration,” Rona said.
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