Leon's Furniture to close on Brick acquisition March 28

Michael J. Knell -- Furniture Today, March 12, 2013

TORONTO — Now that federal regulators have given their stamp of approval, a new Canadian furniture, mattress and major appliance retailing powerhouse will be created on March 28 when Leon's Furniture closes its bid to acquire arch-rival The Brick in a deal valued at approximately C$700 million.

The companies announced Monday that Canada's Commissioner of Competition has issued a "no action" letter - meaning the bureau will not challenge the merger, although it retains the right to challenge the transaction for one year after closing.

The deal received its other major regulatory blessing, from the Alberta Superintendent of Insurance, on Feb. 11.

Shareholders of The Brick can elect to receive either C$5.40 in cash per common share or 0.0054 Leon's convertible debentures per share. A Brick warrant holder can choose between C$4.40 in cash per warrant or 0.0044 convertible debentures. They have until March 25 to choose.

The acquisition price represented a 62% premium over their average trading price of Brick shares and warrants on the Toronto Stock Exchange when the bid was announced last November.

At the time, Terry Leon, longtime CEO of Leon's, said the two companies would continue to operate independently of each other and compete in the Canadian retail marketplace.

"This transaction brings together two great Canadian companies with complementary geographic footprints to strengthen our position in the home furnishings marketplace. We will apply the best practices of both companies to offer even greater value to our customers and create more opportunity for our associates," Leon said in a statement.

In 2011, the two had combined sales of C$2.4 billion. For 2012, Leon's reported sales of C$880.2 million, a slight increase over the prior year. The Brick has yet to report its 2012 fiscal year results.

Neither merchant breaks out sales by product category, but it's believed that their combined furniture and mattress sales account for about 60% of their combined revenue. This would make the new Leon's corporate entity one of the five or six largest furniture and mattress retailers in North America.

At the end of 2012, Leon's operated 76 stores across Canada in every province except British Columbia.

The Brick operates 229 stores under four banners: The Brick, Urban Brick, Brick Mattress Store and United Furniture Warehouse.