Lowe's Companies, Inc. -- Moody's says Lowe's acquisition of RONA boosts its presence in Canada, a credit positive, no impact on ratings or outlook

New York, February 03, 2016 -- Moody's Investors Service said that home-improvement retailer Lowe's Companies Inc.'s (A3 stable) announcement on 3 February that it would acquire RONA Inc, Canada's second largest home-improvement retailer, in an all cash transaction valued at approximately C$3.2 billion is credit positive for Lowe's as the transaction will meaningfully expand Lowe's currently modest presence in the Canadian market and the combined firm is expected to be able to achieve meaningful operating synergies over time said Moody's Vice President Scott Tuhy. While the acquisition is debt-financed and fully priced at around 12.7x EBITDA (as defined by RONA) we expect the impact on credit metrics will be modest and temporary, as we expect Lowe's will return to its stated leverage target within 12 months from the closing of the acquisition. There is no impact on Lowe's A3 senior unsecured rating, Prime-2 commercial paper rating or the stable outlook.

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