MONTREAL -- A battle for control at Rona Inc. could be put off for six months after the home renovation retailer called an annual meeting for May and said it would look into replacing some of its directors.
The hardware company said Thursday it has asked a head-hunting firm seeking a new Rona CEO to also identify potential candidates for directors as it looks to increase representation from outside Quebec, where it is based.
Spokeswoman Michelle Laberge said the actions were already underway when Invesco Canada, its second-largest shareholder, announced Wednesday it would seek to sweep out and replace the existing board.
"It was in the plan that we were going to announce the AGM, so that was always in the plan," she said.
"When they showed their intention (Wednesday), we just thought we would clarify that right off the bat and also clarify the fact that we have been in a process of identifying new board members for the upcoming AGM."
Laberge said executive search firm Korn/Ferry International was initially asked to seek new directors in September. Finding a replacement for Robert Dutton was added after the longtime chief executive resigned last week.
"We proactively started to look into new members because we had some investors who wanted us to bring new people on board."
By announcing the annual meeting, Laberge said Rona has precluded the possibility of an earlier special meeting requested by the dissident shareholder.
Invesco, which holds about 11 per cent of Rona's stock, declined to comment Thursday.
It is among shareholders unhappy with years of weak results at Rona and the board's unwillingness to entertain a $14.50 per share cash takeover bid from U.S. rival Lowe's, which represents about a 45 per cent premium over the price for which the company's stock has traded for much of the last year.
Rona (TSX:RON) said in its proxy circular last year that $100 invested in the company at the end of 2006 was worth little more than $42 five years later.
IA Michael Investment Counsel, manager of ABC Funds, which owns about three million shares representing 2.5 per cent of Rona, supports Invesco's call for change, but is concerned by how long the process could take.
"You're talking a good six months from now... We're disappointed in seeing it dragged out too long," president Irwin Michael said Thursday.
None of the 11 current directors has expressed an interest in not seeking re-election. There are two vacancies.
The board is led by lawyer Robert Pare and includes Geoff Molson, CEO of the Montreal Canadiens, and Quebec business leaders who have been affiliated with Alimentation Couche-Tard (TSX:ATD.B), Rotisseries St-Hubert and Cascades (TSX:CAS).
Many companies invite big shareholders to have seats on the board. But Laberge said that move "wasn't part of the conversation we had internally."
Rona will announce its list of director candidates when it issues its proxy circular in March. Any shareholder can also submit nominees.
Rona has nearly 30,000 employees and 830 locations. Home Depot has 180 stores in Canada and Lowe's about 31.
-- The Canadian Press