UPDATE 4-Major Rona shareholder Invesco seeks to replace board
* Call for shareholder meeting intensifies takeover talk
* Invesco move follows resignation of longtime Rona CEO
* Invesco controls 10.16 pct of home improvement chain
* Lowe's withdrew proposed offer for Rona in September
* Rona shares rise 4.8 pct on Toronto Stock Exchange (Adds comments from investor, Caisse)
By Allison Martell
Nov 14 (Reuters) - Invesco Canada Ltd, one of the largest investors in Rona Inc, called for the removal of the company's board on Wednesday, reviving speculation that the Canadian home improvement chain was ripe for a takeover bid.
Rona's stock rose nearly 5 percent after Invesco said it would request a shareholder meeting for a vote on replacing the current directors of the retailer and distributor.
The move could pit Invesco, with about 10.16 percent of Rona's outstanding shares, against the company's current board, a number of its independent dealers, and even the government in its home province of Quebec.
U.S.-based rival Lowe's Cos Inc withdrew a C$1.8 billion ($1.8 billion) proposal to buy Rona in mid-September in the face of stiff opposition.
But Rona's longtime chief executive, Robert Dutton, stepped down on Friday following disappointing results, prompting speculation that the company could be in play.
Norman Levine, managing director at Toronto investment firm Portfolio Management Corp, said Invesco's move against the board was long overdue.
"For the last five years they've had negative same-store sales, profit has gone nowhere and the stock has sunk. There's been nothing to be happy about as a shareholder of Rona, and yet the board supported Robert Dutton all along," he said.
Levine, whose firm has a small stake in Rona, would like to see a new board return to the table with Lowe's and negotiate a friendly deal.
"This is a deal that makes sense for both sides," he said. "Lowe's needs Rona to extend across the country ... Rona needs a new direction, needs somebody in there to help them, and Lowe's can provide that expertise."
Canaccord Genuity analyst Derek Dley said he was not surprised by Invesco's announcement, given how much has changed over the course of a week.
"It's interesting - it's going to fuel increased speculation that there may be a transaction down the road," he said.
On Wednesday morning, Boucherville, Quebec-based Rona had no immediate comment.
Rona was much discussed during Quebec's autumn provincial election, with both the incumbent Liberal Party and the eventual winner, the Parti Quebecois, opposed to a takeover.
Rona's biggest shareholder is Quebec pension fund Caisse de dépôt et placement du Québec, which controls just over 15 percent of the firm, according to Thomson Reuters data. One key question is how the fund would respond to a bid for Rona.
Spokesman Maxime Chagnon said the Caisse never discusses its investment strategy in advance, and he had no specific comment on Invesco, but he did speak generally about the company.
"We recognize Mr. Dutton's work, his contribution to Rona over the last 35 years, and we fully respect the decision, but now ... we believe Rona must look to the future and focus all of its energy on improving performance," he said.
"The results announced last week reinforced the importance of Rona improving performance."
Rona's acting chief executive, Dominique Boies, joined Rona in 2011 after five years with the Caisse.
The fund, which has a dual mandate of managing the Quebec pension plan and contributing to economic development, boosted its stake in Rona after Lowe's made its proposal.
In September, Quebec's new premier, Pauline Marois, said the Caisse's mandate should be strengthened to keep corporate headquarters in Quebec hands.
The company was founded in Quebec in 1939 by independent hardware stores keen to ditch their powerful wholesalers, and about half of its 30,000 employees are in the mainly French-speaking province.
Rona supplies almost 1,500 outlets in Canada, including about 240 corporate stores and more than 500 dealers and franchises.
Michael Allen, whose family owns a 57,000-square-foot Rona store in Vancouver, British Columbia, said he still supports the company's board. In August, Allen helped organize a group of Rona dealers that criticized the Lowe's proposal.
"It's all a bit of a shock," he said of Dutton's departure. "I respected Robert Dutton very much."
Allen and other independent dealers own about 10 percent of Rona's stock, and if they are unhappy with the company's direction, they can take their business elsewhere. Allen said it would depend on the situation.
"I would stay with Rona as long as Rona wants us as partners, and holds up their end of the bargain," he said.
Allen, whose growing, profitable outlet clears about C$10 million in sales each year, said he would prefer to remain part of a Canadian distribution network.
Shares of Rona were up 4.8 percent at C$11.51 on the Toronto Stock Exchange.