Leon’s to buy The Brick
TORONTO—Storied Canadian furniture retailer Leon’s is buying high-profile rival The Brick in a $700-million friendly deal aimed at fending off U.S. competitors making inroads in Canada.
With American retail giants such as Walmart and Target threatening their share of the marketplace, the two Canadian companies announced a deal that would see Leon’s take ownership of The Brick but operate the two under separate banners.
At a press conference today, Leon’s Furniture Ltd. said it will pay $5.40 per share.
Friday’s closing price on Brick stock on the Toronto Stock Exchange was $3.50.
Brick shares were up 52 percent, or $1.82, to $5.32 in early trading today while Leon’s shares nudged up three cents to $11.60.
The two chains are facing new competitors, chiefly in the form of American retail giant Target, which plans to begin opening up to 135 stores across Canada in the coming year.
Walmart is adding 73 stores across Canada in the coming months, including 28 former Zellers stores.
The acquisition of The Brick will strengthen Leon’s position in the home furnishing marketplace, said Leon’s CEO Terry Leon in a release yesterday.
“During these economic times where we have seen multiple American corporations make inroads in our country through acquisitions, it is a pleasure to see two successful Canadian retailers reach such an agreement that will better serve Canadian consumers,” he noted.
“Our combined team will have access to national buying opportunities in merchandising and marketing, and a national distribution network that will enable us to greatly enhance our online shopping capabilities,” Leon added.
Other major Canadian retailers, such as HBC, Shopper’s Drug Mart, and Jean Coutu, also are making preparations, either through restructuring or how they do business, to prepare for the competitive threat of Target.
Leon will remain CEO of Leon’s and become CEO of the combined company. The Brick’s president and CEO, Vi Konkle, will continue as president of The Brick, the companies said.
“We welcome this opportunity to partner with this iconic corporation,” Konkle said in the release.
“By joining forces, we can strengthen both of our businesses, enhancing everything that has made Leon’s and The Brick two of Canada’s best-known retailers and preserving The Brick’s roots in Edmonton.”
Toronto-based Leon’s hopes to close the deal, which it values at roughly $700 million, in the first three months of next year.
The offer is subject to approval by Brick shareholders, and will need court and regulatory approval.