Lowe’s Cos. has entered into a “definitive agreement” to sell its Canadian retail businesses to Sycamore Partners, a private equity firm based in New York.
The price was “$400 million in cash and performance-based deferred considerations,” according to the release. (figures are in USD.) For that, Sycamore acquires some 450 stores that include 70 Lowe’s big boxes in Canada; about 150-corporate owned RONA stores; the wholesale supply business of another 210 independent RONA stores; plus Reno-Depot’s 20 corporate stores, in addition to Dick’s Lumber.
Lowe’s Companies had acquired the vast majority of these stores on May 20, 2016, for US$2.4 billion, at the time valued at CDN$3.2 billion.
“The sale of our Canadian retail business is an important step toward simplifying the Lowe’s business model. While this business represents approximately 7 percent of our full year 2022 sales outlook, it also represents 60 basis points of dilution on our full year 2022 operating margin outlook,” said Marvin R. Ellison, Lowe’s chairman, president and CEO.
Sycamore Partners, based in New York City, specializes in retail and consumer businesses. Other holdings include Staples, Ann Taylor, Talbots, Dollar Express, and Aeropostale.
In a note to Canadian vendors, Lowe’s Canada president Tony Cioffi expressed his support for the deal saying, “We look forward to teaming up with Sycamore, with its in-depth knowledge of, and appreciation for, the Canadian market through its ownership of Staples Canada/Bureau en gros.”
Sycamore Partners’ managing director Stefan Kaluzny, said: “We are honoured to partner with Lowe’s to establish Lowe’s Canada and RONA as a standalone company headquartered in Boucherville, Quebec.… We look forward to working with the company’s management team to build on its 83-year history as a leading Canadian home improvement business.”
(To read the full release from Lowe’s, click here!)
