Leon's Moves to Buy The Brick

November 11, 2012  by in UnCategorized   

By Home Furnishings Business in Acquisition on November 12, 2012

Canadian retailer Leon's Furniture (TSX: LNF) has agreed to acquire fellow Canadian furniture retailer The Brick (TSX: BRK) in a $700 million deal.

The acquisition will combine Canada's two largest home furnishings retailers. Terry Leon, CEO of Leon's, said during recent tough economic times, Canada has 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 customers."

According to a release, the company plans to run the chains as separate companies out of offices in Toronto and Edmonton. Terry Leon will remain in his position as CEO and will also be CEO of the joint entity. Vi Konkle, president and CEO of The Brick, will continue as president of The Brick. Bill Gregson, executive chairman of the board of The Brick, will remain in an advisory position. It is expected that he will join the Leon's board. Mark Leon will continue as chairman of the board of Leon's.

"This transaction brings together two great Canadian companies with complementary geographic footprints to strengthen our position in the home furnishings marketplace," said Terry Leon. "We will apply the best practices of both companies to offer even greater value to our customers and create more opportunity for our associates. 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. We are very excited to build on the relationships we have established over the years with our respective associates, franchises, customers, shareholders, suppliers and the many communities we serve."

Konkle said The Brick welcomes the partnership.

"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."

Under the agreement, Leon's will acquire all outstanding common shares and common share purchase warrants of The Brick. The transaction is expected to close in the first quarter of 2013, subjects to court approval, regulatory approvals and the absence of any material change with respect to The Brick.

Leon's intends to finance the cash portion of the consideration from existing cash resources and $500 million in committed bank facilities underwritten by CIBC and Desjardins Capital Markets. These committed bank facilities are comprised of a $400 million four-year term credit facility, and a new $100 million revolving credit facility which, if required, will be used to finance the transaction and otherwise will be available for general corporate purposes.

Leon's was founded in 1909 and has 76 stores. The Brick, which opened its first store in 1971, operates 230 stores under The Brick, United Furniture Warehouse, The Brick Mattress Store and Urban Brick banners.

The complete release can be found online.