Newspaper article The Canadian Press

Leon's to Buy the Brick in $700M Friendly Deal Aimed at U.S. Retailer Threats

Newspaper article The Canadian Press

Leon's to Buy the Brick in $700M Friendly Deal Aimed at U.S. Retailer Threats

Article excerpt

Leon's buys The Brick as U.S. retailers move in

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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 Sunday a deal that would see Leon's take ownership of The Brick but operate the two under separate banners.

The deal also comes amid a tough economic climate for furniture retailers with a number of factors, including a softening housing market, taking a toll on sales.

In a joint release, Leon's Furniture Ltd. (TSX:LNF) says it will pay $5.40 per share. Friday's closing price on Brick (TSX:BRK) stock on the Toronto Stock Exchange was $3.50.

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 would will strengthen Leon's position in the home furnishing marketplace, said Leon's CEO Terry Leon in a release.

"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 said.

"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."

Other major Canadian retailers such as HBC, Shopper's Drug Mart and Jean Coutu are also 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. …

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