Canada’s home furnishing retailer Leon's Furniture to acquire The Brick for $698.85 mn

Canadian home furnishing retailer Leon's Furniture Ltd yesterday said that it will acquire its smaller domestic competitor The Brick Ltd in a C$700 million ($698.85 million) deal in order to take on US rivals Walmart and Target.

Under the terms of the deal, Leon's is offering to pay C$5.40 per share, a 54 per cent premium over The Brick's Friday closing price of C$3.50, valuing the company at around C$657 million.

Leon's will also buy all common share purchase warrants of The Brick for C$4.40 per warrant, taking the total deal value to about C$700 million.

Brick shareholders can opt to receive 0.0054 convertible debentures for each share held, instead of cash and 0.0044 convertible debentures per warrant instead of cash.

Leon's said that it plans to fund the cash portion of the transaction from existing cash resources and $500 million in committed bank facilities.

Majority shareholders, Comrie, founder of The Brick, Fairfax Financial Holdings Limited, Chou RRSP Fund, and Bill Gregson, the executive chair of The Brick's board of directors, holding around 66.6 per cent of the outstanding common shares and warrants, have all agreed to tender their shares to the offer.