Fund calls for removal of Rona board, new directors for home improvement giant
TORONTO - A fund manager that owns about one-tenth of Rona Inc. is calling for shareholders to remove the company's board of directors and install new directors.
Invesco Canada's call for a clean sweep at the home-improvement chain comes after dismal financial results were released last week by Rona (TSX:RON).
Rona's long-time chief executive has already left the company.
The unexpected departure of Robert Dutton last week came two months after he and the other Rona directors fended off a takeover by American rival Lowe's.
That was followed by a financial report that showed Rona's third-quarter profit sank nearly 90 per cent compared with last year, dropping to just $5.1 million.
The recent development has stirred calls for change at Rona, which has Canada's largest network of home improvement retail stores.
On Monday, Rona denied a newspaper report that it has received a new takeover offer from Lowe's Companies or has held discussions with its U.S.-based rival.
Invesco Canada provided no comment on the reason for the demand for shareholder meeting to select a new board. However, other fund managers have complained about Rona's weak stock price.
Invesco, which operates Trimark, Invesco and PowerShares brands, controls 12.3 million shares of Rona on behalf of investors.
Montreal La Presse reported last weekend that Dutton resigned because he disagreed with the Rona board's interest in a $15 per share offer it had received from Lowe's.
A Lowe's spokeswoman has said that it has not had any conversations with Rona since it withdrew its proposal in September to offer $14.50 per share cash, but Julie Yenichek wouldn't say if the company was still interested in a takeover.
Rona currently has nearly 30,000 employees and 830 locations under its banner, giving Rona a bigger reach in Canada than Home Depot or Lowe's, the No. 1 and No. 2 home improvement retailers in the United States.
Home Depot has just 180 stores across Canada and Lowe's has about 31 Canadian locations, out of 1,745 across North America.