The four Eagle Hardware & Garden stores in Utah will get a new owner early next year if the $1 billion merger agreement announced Sunday goes through, as scheduled, early next year.
Lowe's Companies Inc., the nation's second largest retailer of home improvement products - Home Depot is the largest - will acquire Eagle in a stock swap deal.Directors of both companies have already approved the deal, subject to the usual government regulatory approvals, but no problems are anticipated since the two companies do not compete in the same markets.
Eagle, based in Renton, Wash., operates 32 stores in nine western states, including four in Murray, Sandy, Orem and Layton. The company has a total of 6,000 employees of whom some 700 are in Utah.
Lowe's, based in Wilkesboro, N.C., has 465 stores in 26 states and some 65,000 employees. Earlier this year, Fortune magazine named Lowe's to its list of "The 100 Best Companies to Work for in America."
Lowe's chairman and CEO Bob Tillman said in a phone interview Monday that Salt Lake is a "great market" and that further expansion in this area is a strong possibility.
"Four stores in Salt Lake is not enough, so this is one area where we are looking very closely at building new stores," said Tillman.
He said Lowe's intends to keep the Eagle name on the stores but will add the Lowe's name as well. He said there is no possibility of layoffs due to the merger.
"We don't want to disrupt the business but rather add value to it. This has nothing to do with layoffs. Lowe's is adding 10,000 to 12,000 new employees per year and we need all the good people we can get."
Tillman said the merger allows Lowe's the chance to accelerate its Western expansion program.
"We are acquiring good sites, successful stores and well-trained people with valuable experience in the industry," said Tillman. "We are very impressed with their store management and employees."
The merger is structured as a tax-free exchange of Lowe's shares for Eagle's shares, valued at $29 each for purposes of the merger. Eagle shareholders will receive the number of Lowe's shares obtained by dividing $29 by the average of the daily closing price of Lowe's stock on the New York Stock Exchange in a 10-day trading period ending on the fifth day before the deal is closed.
A spokesman said that in no event will the number of Lowe's shares issued per Eagle share be less than .6400 or more than .8659.
Lowe's had announced earlier this year it intended to expand into the western United States by opening 100 stores in the region over the next three to four years.
"The timing of this partnership is right for our shareholders, employees and most importantly our loyal customers," said David J. Heerensperger, Eagle chairman, in a prepared statement. "We immediately gain access to more capital and buying power, plus our employees will benefit greatly from the career advancement opportunities related to Lowe's phenomenal growth."
Eagle president and CEO Richard T. Takata, who will oversee the combining of the two companies while reporting to Tillman, termed the deal a "tremendous opportunity" for Eagle to join "one of the best employers in the country."
In morning trading Monday, Wall Street was reacting positively to the merger. Lowe's shares were up 2.69 percent to $40.62 and Eagle was up 2.27 percent to $28.12 1/2.