RONA announces sweeping board changes in deal with two largest shareholders
Canadian home improvement retailer Rona (TSE:RON) saw its shares rise over two per cent Monday after announcing sweeping changes to its board as it looks to recover and refocus after a tumultuous year in 2012.
Shares were lately higher by 2.43 per cent, trading at $11.78.
Despite intense competition, a decline in same-store sales and higher inflation costs in 2012, the company notably rejected a $1.76 billion hostile takeover from U.S. rival Lowe’s Companies (NYSE:LOW) in July, saying it wasn’t in the best interest of its shareholders.
Former CEO Robert Dutton then stepped down in November, after 35 years, just days after the company posted a sharp drop in third-quarter profit. Then in December, the company said it was preparing to sell non-core assets and make other strategic moves to improve its profitability as it is under pressure to improve its bottom line.
As it prepares to turn things around this year, the company said today that it has entered into an agreement with two of its largest shareholders, Caisse de dépôt et placement du Québec and Invesco Canada Ltd., “providing for several changes” to its board of directors.
Chevrier replaces Robert Paré, who steps down as chairman but continues to serve as a board member.
Also joining the board are Bernard Dorval, former group head of insurance & global development at TD Bank Financial Group (TSE:TD) and deputy chair at TD Canada Trust; Wesley Voorheis, partner at Voorheis & Co. LLP and managing director, VC & Co. Inc.; Guy Dufresne, corporate director and former president and CEO of ArcelorMittal Mines Canada (NYSE:MT); and Barry Gilbertson, principal with Barry Gilbertson Consultancy.
"I am delighted to welcome Robert Chevrier to the Rona Board,” said Paré.
“Robert has strong expertise in Rona's main operating segments of retail, distribution and commercial and professional."
Paré said the board is confident that Chevrier has the experience required to assist the company as it executes on its strategic and financial priorities.
"Robert, Bernard, Wesley, Guy and Barry collectively bring a strong track record of operational, retail and distribution success, along with significant leadership experience on public company boards,” he added.
“In addition to their expertise, they will bring a more diverse geographic representation. This is a very important moment for the company as it focuses on achieving its full potential.”
Alain Michel and Patrick Palerme will also resign from Rona's board, effective immediately, to allow for its reconfiguration, the company said.
In addition, two other board members, Steven Richardson and an additional nominee, will be up for election at Rona's annual general meeting in May, in replacement of two current directors who will not stand for re-election.
The total number of Rona directors will increase from 12 to 14, eight of whom will be new directors.
In other news Monday, Rona said that it has retained the services of a global management consulting firm to “accelerate progress” on its strategic priorities announced in December, when it said it was preparing to sell non-core assets and make other strategic moves.
The Montreal-based company has been under pressure to improve its bottom line, especially since it rejected the Lowe's bid.
Rona did not provide details about where the cuts will be made and said it will provide a detailed update, including specific action plans and key metrics, in its fourth quarter earnings presentation on February 21.
Further, Rona expects to provide an update on its process to recruit a new CEO before the end February.