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Rona Acquires Réno-Dépôt PRESS RELEASE For immediate distribution RONA ACQUIRES RÉNO-DÉPÔT Investor conference call and webcast Concerning the acquisition of Réno-Dépôt by RONA, today, April 23 at 9:00 a.m. EDT. To join the conference call: dial 1-800-814-4853. Only financial analysts will be invited to ask questions. The conference call will be webcast at: http://www.newswire.ca/webcast/viewEventCNW.html?eventID=528440 A presentation will be posted shortly before 9:00 a.m. at: http://www.newswire.ca/webcast/viewEventCNW.html?eventID=528440 News conference Concerning this acquisition, today, April 23, 2003, at 11:30 a.m. EDT at the Mount Royal Centre, 2200 Mansfield Street, Cartier Room, Level 3a, Montreal. For those who prefer to join the news conference via telephone, dial: 1-800-814-4857 (English) or 1-800-814-4860 (French) or 1-800-814-4890 (original feed, no simultaneous translation). Only media representatives will be invited to ask questions. The news conference will be webcast at: http://www.newswire.ca/webcast/viewEventCNW.html?eventID=529100 Those who use the webcast will not be able to ask questions. Montreal, April 23, 2003 – RONA Inc. (“RONA”) (TSX: RON), a Canadian leader in the home improvement and gardening industry, is acquiring Réno-Dépôt Inc. (“Réno-Dépôt”) from British multinational Kingfisher plc (“Kingfisher”) (London: KGF; NYSE: KFSGY; Paris: KGF-PAR). RONA will purchase from Kingfisher the 20 big-box Réno-Dépôt stores, 14 of which are located in Quebec and six in Ontario, operating under the name The Building Box. Réno-Dépôt represents a sales area of some 2.1 million square feet and employs approximately 4,300 people. In 2002, Réno- Dépôt recorded sales of $846.6 million and operating profits (EBITDA) of $57.6 million. Subject to closing adjustments, the purchase price will be $350 million, payable in cash. This price includes Réno-Dépôt’s operational real estate, with a book value of approximately $93 million. This implies a value of $257 million for the Company’s operations. …/ 2. The transaction is subject to customary conditions and the required regulatory approvals, including from the Competition Bureau. Closing is expected for late summer 2003. Notwithstanding delayed closing pending Competition Bureau approval, the effective date of the transaction will be March 29, 2003. Thus, even though the two companies will continue to operate as totally separate entities until closing, free cash flows from Réno-Dépôt’s operations starting March 29 will accumulate until closing for RONA’s benefit, and RONA will pay Kingfisher interest charges on the purchase price during that period. Strengthening RONA’s competitiveness This acquisition offers major advantages and will allow RONA: to consolidate and densify its network in the most densely populated and competitive region of Canada, namely the Quebec-Windsor corridor, where all of Réno-Dépôt’s 20 stores are located. This increased density offers advantages in terms of operating and marketing efficiency; to increase its purchasing volume, which will translate into additional rebates and more advantageous purchasing conditions; to take advantage of RONA and Réno-Dépôt’s complementary expertise, by applying a best practices program; to realize major synergies in the short and medium terms, estimated at least at $35 million annually; to repatriate to Canada strategic decisions concerning Réno-Dépôt’s development. This will re-energize Réno-Dépôt’s development by integrating it into RONA’s business plan, a company solidly committed to serving the Canadian market; to strengthen RONA’s competitiveness in the Canadian home improvement and gardening industry and to “drive down the cost of renovation in Canada.” Thus, RONA will be able to enhance its competitiveness on all fronts: price, service and logistical efficiency. A profitable transaction RONA expects the transaction to be immediately accretive to its earnings. According to Robert Dutton, president and chief executive of RONA, “This transaction is most promising. Not only is it interesting from the perspective of RONA and its shareholders, but it is profitable for all the stakeholders involved: store employees, consumers and manufacturers of hardware, home improvement and gardening products. Indeed, Réno-Dépôt employees, who we know are highly skilled, will be able to actively contribute to the growth of RONA, a company they know well.” “Moreover this transaction will ensure the future of a strong Canadian competitor in all the regions of the country and in all segments of the industry. For Canadian consumers this assurance represents an added benefit of RONA’s increased competitiveness. For their part, Canadian manufacturers will benefit from our growth, notably because we purchase where we sell.” 3. Financing RONA has obtained from a syndicate of financial institutions the necessary credit to fully fund the transaction. RONA intends to keep the financial flexibility required to sustain its ongoing growth. In that context RONA is reviewing the possibility of an equity offering when market conditions so permit. Forward-looking information This press release contains forward-looking statements reflecting RONA’s objectives, estimates and expectations. These statements are identified by the use of verbs such as “believe, “anticipate,” “estimate,” and “expect” as well as by the use of future or conditional tenses. By their very nature, these types of statements involve risks and uncertainty. Consequently, reality may differ materially from the Company’s projections or expectations. For information on the nature of risk factors not specifically stated in this press release, the reader can consult RONA’s annual report 2002 under the heading “Risks and Uncertainties,” page 24. About RONA RONA is one of Canada’s leading distributors and retailers in hardware, home improvement and gardening products. RONA operates a network of some 527 franchised, affiliated and corporate stores of various sizes and formats. Some 16,000 employees in all regions of Canada work under the various banners. The RONA network represents almost 10 million square feet and annual retail sales approaching $3 billion. About Kingfisher Kingfisher is Europe’s leading home improvement retailer. With more than 600 home improvement stores in 12 countries Kingfisher is the world’s most international home improvement retailer, enjoying market-leading positions in the UK, France, Poland and Taiwan. Sales for the Home Improvement sector for the year to 1 February 2003 were over £6.7 billion, with retail profit of more than £534 million. - 30 - Please visit www.rona.ca for more detailed information on the acquisition and for photos. For information: Sylvain Morissette Director of Communications RONA inc. (514) 599-5123 1-877-599-5900 ext. 5123 [email protected] RONA-KINGFISHER TRANSACTION Purchaser: RONA Inc. (Canada) Seller: Kingfisher plc (United Kingdom) Assets purchased: Retail operations of Réno-Dépôt Inc. Purchase price: Approximately $350 million in cash Included in transaction: A business concern worth approximately $257 million (20 corporate big-box stores) and real estate owned by Réno-Dépôt, with a book value of $93 million. Financing: RONA has obtained the credit required to finance this transaction through a syndicate of banks. Terms and conditions: This transaction is subject to certain customary conditions, namely legal approval by regulatory agencies, including the Competition Bureau. RONA FACT SHEET Number of employees: Approximately 16,000 employees Head office: Boucherville, Quebec Distribution: Integrated national distribution network comprising five warehouses located in Eastern, Central and Western Canada. The company’s largest distribution centre, located near Montreal, covers 650,000 square feet and has been operational since 1999. Business volume: $2.8 billion in 2002 (annual network retail sales) Number of stores: 527 stores in all, in 9 provinces of Canada Total retail selling space: Over 10 million square feet The RONA Network NF PEI NS NB QC ON MB SK AB BC TOTAL Big-Box Stores (1) - - - - 23 8 2 - 5 3 41 Traditional Stores (2) 3 - - 7 253 21 - 1 8 18 311 Specialized Stores (3) - - 3 - 85 85 - - 2 - 175 TOTAL 3 - 3 7 361 114 2 1 15 21 527 (1) RONA Home & Garden, RONA L’entrepôt, RONA Le Régional (2) RONA Hardware, RONA Home Centres, RONA L'express, RONA Le Quincaillier, RONA Le Rénovateur (3) RONA Building Centre, RONA Cashway, RONA Lansing, RONA L'express Matériaux, Botanix As at April 8, 2003 RÉNO-DÉPÔT FACT SHEET Number of employees: Approximately 4,300 employees Head office: Montreal Distribution: Réno-Dépôt relies mainly on direct shipment to supply its stores. The company also has a warehousing space in Montreal. Sales: $846.6 million in 2002 Number of stores: 20 stores in all, located in Quebec and Ontario Total retail selling space: Over 2.1 million square feet Banners Provinces Number of stores Réno-Dépôt Quebec 14 The Building Box Ontario 6 TOTAL Canada 20 As at April 16, 2003 A BRIEF HISTORY OF RONA 1939 In order to get around a monopoly that was threatening their ability to access supplies, a group of hardware store operators formed Les Marchands en Quincaillerie Ltée. Their objective was to pool orders for various product lines in order to secure better prices. 1950 Leasing of a warehouse in Montreal. The group then counted on three warehouses to meet the needs of its members. 1960 Incorporation of Quincaillerie Ro-Na Inc. Its objective: increase business through collective advertising and sales promotion of all types. 1962 Acquisition of Les Marchands en Quincaillerie by a group of hardware store operators. Member- merchants acquired all shares in the company. This transaction represents a major event in the organization's history as it marks the beginning of the cooperative system which the Group favours to this day. 1970 Dissolution of Quincaillerie Ro-Na Ltée and adoption of the Marchands Ro-Na Inc. name in replacement of the Marchands en Quincaillerie Ltée name. 1982 Ro-Na purchases the assets of Botanix and integrates its dealer network into its own operations.
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