Home Depot, Lowes, Target, Wal-Mart: Seeking To Expand In Canada

Home Depot, Lowes, Target, Wal-Mart: Seeking To Expand In Canada
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The Home Depot, Inc. (NYSE:HD) reached a definitive merger agreement with US Home Systems Inc (NASDAQ:USHS). According to the joint statement released by both companies, Home Depot agreed to purchase the shares of USHS for approximately $93 million at $12.50, a 38 percent premium of its closing price at the Nasdaq Global Market on Monday, August 6.

Home Depot, Lowes, Target, Wal-Mart: Seeking To Expand In Canada

The board of directors of US Home Systems Inc (NASDAQ:USHS) unanimously approved the acquisition agreement. Murray Gross, chairman and CEO of USHS, said the board of directors of the company evaluated alternatives to boost the stockholder value. Murray said, “We are pleased that this transaction appropriately recognizes the value of USHS’ relationships and solutions, while providing our stockholders with an attractive cash premium for their investment.”

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On the other hand, Kevin Hoffman, senior vice president of Home Services of The Home Depot Inc. (NYSE:HD), said both companies have a long-standing business relationship. According to him, the company expects to enhance the home service experience of their customers further, by formally bringing USHS to the Home Depot family.

The home improvement business of USHS manufactures and sells some of its products under the Home Depot Kitchen & Bathroom Refacing, and Home Depot Garage & Closet Organization brands, as well as Candian Tire Home Services Kitchen & Bathroom Refacing brand. As of January 2012, the company serves Home Depot in 66 markets in the United States and 2 markets in Canada.

The transaction is subject to review and approval of regulators. Both companies expect to close the deal by the end of 2012.

Bryant Park Capital Securities, Inc. serves as the exclusive financial advisor of USHS, while J.P. Morgan Securities LLC and King & Spalding LLP, serve as financial advisor and legal advisor for Home Depot, respectively.

Meanwhile, Lowe’s Companies, Inc. (NYSE:LOW), one of the rivals of Home Depot failed to get the approval of the board of directors Rona to accept its offer to acquire the company for $1.76 billion in an effort to expand its business operations in Canada. According to Rona, the unsolicited offer of Lowe’s was not in the best interest of its shareholders, and its focus is to execute its strategic business plans to capture significant opportunities.

Target’s (NYSE:TGT) acquisition deal with Zeller’s Inc. was recently approved by the Canadian government. The company is scheduled expand its business operation in the country. Wal-Mart Stores, Inc. (NYSE:WMT) allocated $750 million to expand its presence in Canada.

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