Canadian home furnishing retailer Leon's Furniture Ltd (LNF.TO) is buying smaller domestic rival The Brick Ltd BRK.TO in a deal worth about C$700 million ($698.85 million), including the value of warrants issued by The Brick, to deepen its retail footprint.
As per the deal, Leon's will pay C$5.40 per Brick share, a 54 percent premium over Friday closing price of C$3.50. Based on 121.6 million shares outstanding, as per Thomson Reuters data, the equity value of The Brick deal will be C$656.6 million.
Also, Brick shareholders can elect to receive 0.0054 convertible debentures for each share held, instead of cash.
Besides stock, Leon's will acquire all of the outstanding common share purchase warrants of The Brick for C$4.40 per warrant, bringing the total value of the deal to about C$700 million.
For each warrant, the holder can elect to receive 0.0044 convertible debentures per warrant instead of cash.
Leon's and The Brick will continue to operate as separate banners out of offices in Toronto and Edmonton, the two companies said in a statement.
"This transaction brings together two great Canadian companies with complementary geographic footprints to strengthen our position in the home furnishings marketplace," Leon's Chief Executive Terry Leon said in the statement.
Leon's intends to finance the cash portion of the consideration from existing cash resources and $500 million in committed bank facilities.
($1 = 1.0017 Canadian dollars)
(Reporting by Sakthi Prasad; Editing by Muralikumar Anantharaman)