Invesco Canada Ltd (IVZ.N), one of the largest investors in Rona Inc RON.TO, said it would ask the Canadian home improvement chain to call a shareholder meeting to vote on removing its directors, intensifying takeover speculation.
Rona's stock rose more than 5 percent after Invesco announced its intentions in a statement on Wednesday. Invesco controls about 10.16 percent of the outstanding shares of the home-improvement retailer and distributor.
"It's interesting - it's going to fuel increased speculation that there may be a transaction down the road," said Canaccord Genuity analyst Derek Dley.
Rona's longtime chief executive, Robert Dutton, stepped down on Friday following disappointing quarterly results, reviving speculation that the company is in play. On Wednesday morning, Rona said it had no immediate comment.
U.S.-based rival Lowe's Cos Inc (LOW.N) withdrew a C$1.8 billion ($1.8 billion) proposal to buy Rona in mid-September after opposition from the Canadian company's board and management.
The proposal, which never became a formal offer, also faced criticism from politicians in Rona's home province of Quebec and from many of Rona's independent dealers.
Rona supplies almost 1,500 outlets in Canada, including about 240 corporate stores and more than 500 dealers and franchises.
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.
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.
Rona's biggest shareholder is Quebec pension fund Caisse de dépôt et placement du Québec, which controls just over 15 percent of Rona, according to Thomson Reuters data. The fund could not immediately be reached for comment.
Rona's acting chief executive, Dominique Boies, joined the company 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.
Rona was much discussed during Quebec's autumn provincial election, with politicians from both the incumbent Liberal Party and the eventual winner, the Parti Quebecois, opposed to a takeover of the firm.
In September, Quebec's new premier, Pauline Marois, said the Caisse's mandate should be strengthened to keep corporate headquarters in Quebec hands.
Shares of Rona were up 6.1 percent at C$11.65 on the Toronto Stock Exchange.
(Reporting by Allison Martell; Editing by Lisa Von Ahn, Marguerita Choy and; Peter Galloway)