* Lowe's withdrew takeover proposal in September
* Lowe's says no recent talks with Rona
* Robert Dutton has been chief executive since 1992
* CFO Boies to be interim chief executive
* Rona shares jump more than 7 percent
(Recasts with surprise after disappointing results, adds
investor comments, updates share price move)
By Allison Martell and Euan Rocha
TORONTO, Nov 9 Canadian home-improvement
retailer and distributor Rona Inc, which earlier this
year rejected a takeover offer from U.S.-based rival Lowe's Cos
Inc, said on Friday that Chief Executive Robert Dutton
was stepping down, a surprise move that came two days after
Rona said Chief Financial Officer Dominique Boies would
serve as acting CEO while the company looks for a successor.
Rona shares jumped amid speculation that the Quebec-based
company might be in play.
Fund manager Irwin Michael, whose I.A. Michael Investment
Counsel Ltd is one of Rona's top shareholders, said Dutton's
"completely unexpected" departure gives the company a chance to
rethink its plans.
"The fact is, Rona needs change," he said. "They have got to
be open to a number of things. They have to consider
shareholders as well - the stock has done very, very poorly
along with the very poor results."
In an unusual strategy for hardware stores, where big has
long seemed beautiful, Rona has put a shift away from big box
stores at the center of its turnaround strategy. It is opening
more "satellite" and "proximity" outlets that run 5,000 to
35,000 square feet, rather than the 100,000 square feet-plus
found at most big boxes.
Lowe's spokeswoman Chris Ahearn said there had not been any
recent talks with Rona.
"Since we withdrew our proposal to work with the Rona board,
there have been no further discussions," she said.
Acting chief executive Boies joined Rona in 2011, after five
years with the Caisse de dépôt et placement du Québec, Rona's
The Caisse, which has a dual mandate of managing the Quebec
pension plan and contributing to economic development, boosted
its stake after Rona made the Lowe's proposal public. Caisse
owns over 15 percent of Rona's outstanding shares, according to
the latest Thomson Reuters data.
SHARES RISE ON NEWS
Shares of Rona were up 7.9 percent at C$10.09 on Friday
afternoon on the Toronto Stock Exchange, off an intraday high of
C$10.25. The broader market was little changed.
Canaccord Genuity analyst Derek Dley said traders were
probably covering short positions, given the chance that a new
CEO might improve Rona's performance, and speculation that
Dutton's departure could clear the way for a sale.
"A lot of investors had been looking for a change-up at the
top with Rona for quite some time," he said. "They have lagged
But Dley said he still did not think a deal for Rona was
likely: "At the end of the day, that was a board decision, not
just the CEO's decision."
Michael warned that an extended search for a successor could
further erode Rona's market share and value.
Rona, which reported a surprise drop in quarterly profit on
Wednesday, did not say why Dutton was leaving.
Dutton joined the company in 1977, became chief executive in
1992, and oversaw much of Rona's transformation from modest
Quebec hardware distributor to nation-wide retailer.
During Dutton's tenure, annual sales skyrocketed from C$450
million to more than C$4.8 billion. But sales at established
stores have dropped in several recent quarters.
Lowe's withdrew its C$1.8 billion proposal, which never made
it to formal-offer stage, amid opposition from Rona, politicians
in the retailer's home province of Quebec and a large group of
Rona's independent dealers.
Under the new strategy, Rona initially planned to shut 10 of
its biggest stores and split up 13 others by the end of 2013.
But on Wednesday, Rona postponed the closing of five big-box
stores to better coordinate with the new openings and to cushion
the financial impact of the move to smaller stores.
(Editing by Kenneth Barry, Bernadette Baum, Janet Guttsman,