October 07, 2016 - 9:25 AM
MONTREAL - Lowe's has boosted its offer for Rona's remaining preferred shares, more than four months after the U.S. home renovation retailer closed its $3.2-billion takeover of its Canadian rival.
Lowe's is offering a total of $165.5 million, or $24 per share in cash, to the holders of the 6.9 million preferred shares.
The preferred shareholders rejected a $20 per share offer in March.
At the time, preferred shareholder Stirling Capital of London described the prior offer as "oppressive" because it was less than the $25 face value for the shares.
Lowe's (NYSE:LOW) says the purchase of the outstanding preferred shares and retiring of $117 million in debentures will simplify its financial reporting obligations by eliminating administrative functions associated with publicly traded shares.
The company would also no longer have to pay quarterly dividends to the preferred shareholders.
The offer must be approved by at least two-thirds of preferred shareholders at a meeting expected to take place in November.
Fidelity Investments Canada, which owns a significant number of these shares, has agreed to vote in favour of the deal.
Preferred shares have a higher claim than common shares on the assets and earnings of a company and generally have dividends that must be paid out first.
News from © The Canadian Press, 2016