* Company says will return to roots as distributor
* Rona promises simpler structure, quarterly updates
* Shares rise more than 3 percent on the TSX
(Adds CEO comments, background, updates share price move)
By Euan Rocha and Allison Martell
Dec 6 Canadian hardware retailer and distributor
Rona Inc will sell assets and simplify its operations
as part of a back-to-its-roots strategy designed to turn its
fortunes around, the company's interim chief executive said on
Dominique Boies, who took the reins at Rona following last
month's exit of long-time CEO Robert Dutton, said he plans to
bring profit margins in line with industry standards with his
changes, which will shift the company's focus back to its roots
as a hardware distributor.
Rona, Canada's largest distributor and retailer of hardware,
home renovation and gardening products, has grown through a
series of strategic acquisitions.
But the Quebec-based company has stumbled in recent years
amid strong competition from U.S. giants Home Depot and
Lowe's Cos Inc. Earlier this year it was the target of
an unsolicited C$1.8 billion ($1.8 billion) takeover proposal
Lowe's withdrew its proposal in mid-September in the face of
stiff opposition from both provincial politicians in Quebec and
from many of Rona's independent dealers.
Dutton stepped down early last month, soon after the company
announced another quarter of disappointing results.
His departure prompted speculation that the company could be
back in play, but in an interview with Reuters on Thursday,
Boies said Rona has had no discussions with Lowe's since
rejecting the U.S. company's proposal earlier this year.
Boies acknowledged that the company's operations have become
too complex. "We are really trying to assess the true
performance and true potential of all of our businesses," he
said. "We know that distribution has always been core to Rona
and that it is a high-performing business."
He said Rona plans to simplify its business model and boost
its focus on distribution as it disposes of non-core assets and
The company will offer quarterly updates on its initiatives
and performance, and Boies said he will meet with investors and
stakeholders in coming weeks to discuss Rona's strategic and
Last month, following the disappointing results, Invesco
Canada Ltd, one of Rona's largest investors, called for
the removal of the company's board.
Boies said Invesco has refused to engage in discussions with
the company since it issued a release on Nov. 14 disclosing its
intent to requisition a meeting of Rona shareholders.
He said Rona remains open to discussions with Invesco and it
has even asked Invesco, which controls about 10.16 percent of
the company's shares, for potential nominees to fill two vacant
seats on its board.
"We have offered to have Invesco propose candidates and to
include them in our process, but they have not done so yet,"
Boies told Reuters.
Shares in Rona were up 3.1 percent at C$10.46 in midday
trading on the Toronto Stock Exchange on Thursday.
(Reporting by Euan Rocha in Toronto and Bhaswati Mukhopadhyay
in Bangalore; Editing by Ted Kerr, Janet Guttsman and Peter