Shares of Canadian home-improvement retailer Rona Inc. fell early on Wednesday after the company said it was not for sale.
The stock closed up 12 percent on Tuesday after the chief financial officer of competitor Lowe’s Cos Inc, Robert Hull, called Rona a “very interesting company”.
He told Reuters that Lowe’s was open to all options should the Canadian chain put itself up for sale.
In a statement after the market close, Rona said combining with another company would not be in the best interests of the company or its stakeholders.
National Bank Financial analyst Vishal Shreedhar put the chance of Lowe’s buying Rona in the next year at 25 per cent.
“We do not think that Rona is a good fit for Lowe’s,” he wrote in a Wednesday morning note to clients. “The key consideration for Lowe’s will be how much it is willing to change its approach in order to deliver faster growth in Canada.”
Mr. Shreedhar said the two chains have different store-ownership structures, and that Rona operates several store sizes and banners, while Lowe’s prefers to standardize outlets.
Once Canada’s dominant do-it-yourself chain, Boucherville, Quebec-based Rona has struggled as U.S.-based Lowe’s and Home Depot have made inroads.
Sales at Rona’s established stores, a key measure for retailers, fell 7.3 per cent in the year ended Dec. 25, 2011. The company said on Feb. 23 that it was shifting its focus away from big-box stores, and would close or cut the size of 23 locations to stay competitive.
Rona’s stock was down 4.1 per cent at $10.05 in early trading on the Toronto Stock Exchange on Wednesday.