The purchase by Toronto-based Leon's Furniture of erstwhile rival The Brick is all but a done deal as the federal Canadian Competition Bureau has declined to oppose the deal. Both companies say that the agency has issued what they term a "no-action letter" which for all practical purposes means the deal is done, even though the bureau maintains a one year window during which it can raise objections.
As reported by Marketnews last November, the friendly takeover was worth about $700 million. A month ago, the Alberta Superintendent of Insurance deemed that the deal to buy Edmonton-based The Brick satisfies its requirements.
Closing date for the deal is now slated for March 28. Leon's is currently offering $5.40 a share for The Brick's common stock, or a 0.00054 convertible debenture. Holders of warrants can choose either $4.40 cash or 0.0044 per unit. Applications for payouts are due by March 25.
In connection with the arrangement to be bought out by Leon's, The Brick is offering purchase of its own 12% Senior Secured Debentures, which fall due on May 30, 2014. It is also arranging an offer to purchase any and all outstanding debentures.
Leon's operates 76 stores, including franchises from Newfoundland to Alberta.
It marked its centennial in 2009.
The Brick operates 229 stores under four banners: The Brick, The Brick Mattress Store, Urban Brick, and United Furniture Warehouse. Its first store opened in Edmonton in 1971. Its corporate superstores are in large urban centres, while most of its franchises are in smaller communities. Leon's, on the other hand, has many franchises in medium-sized cities.
In 2011, the last year for which The Brick's yearly numbers are available, the two retailers racked up a combined sales tally of $2.4 billion. For 2012, Leon's numbers were up slightly to $880.2 million. The deal creates the largest furniture-appliance-electronics retail organization in Canada.
Neither company was in trouble, Terry Leon, President of Leon's and new CEO of The Brick, emphasized to Marketnews last November when the deal was announced. "It was just the right time to grow."
In Q3 2012, the Leon's banner reopened renovated franchise stores in Sault Ste. Marie and Sudbury, ON. It also opened its third Appliance Canada showroom, in Toronto. Q4, the Saint John, NB, franchisee reopened in a brand new location.
In Q1 this year, a 42,000 square foot store in Orangeville and a 36,000 square foot store in Brantford will enhance the presence of the Leon's banner in southern Ontario. A brand new 50,000 square foot Leon's will open in Sherbrooke, QC.
In Photo:(Left to Right) - Bill Gregson, Executive Chairman, The Brick; Marc J. Leon, Chairman of Leon's Furniture Limited; Vi Konkle, President and Chief Executive Officer, The Brick; Terry Leon, President and Chief Executive Officer, Leon's Furniture Limited.
Photo by: Wally Hucker