Leon’s buys out The Brick for $700 million

To compete against American companies, Leon’s acquired The Brick.
With the growing concern over American companies imperializing the Canadian consumer sector, Leon’s merged with The Brick last week in a $700 million deal.
With the growing threat of American companies like Wal-Mart, Target and Sears, as well as overseas companies like IKEA, Terry Leon, President and CEO of Leon’s said that it is the most ambitious expansion plan in Leon’s 103-year history and that the merger is essential to maintain strength in an increasingly cut-throat industry.
“Sometimes, as Canadians, we’re not willing to take the risks necessary to compete in the World,” said Leon in an interview with The Toronto Star.
Leon said that the merger is a way for two great Canadian companies to grow, and expand and to service Canada better.
“Obviously, it puts us in a better position vis-a-vis the Americans who might come into the marketplace, but I don’t think that will be our primary motivation,” said Leon in an interview with the Edmonton Journal.
A growing number of retailers compete with both Leon’s and The Brick, from Best Buy and Future Shop to Ikea – even Canadian Tire, said Ken Wong, a Business Professor at Queen’s University as reported by The Toronto Star.
“Ikea is the 800-pound gorilla. It’s at the same price point, but has global buying power and efficiencies,” said Wong.
The deal, Wong said, will allow Leon’s to cut costs on everything from sourcing to distribution and invest that back into price, quality, service or new financing programs.
Bill Gregson, Spokesman for The Brick, said that the merger will create a stronger overall company able to compete more efficiently.
“By getting bigger, by getting more efficient and by getting some of these synergies whether it be on purchasing online etc. is that we’ll position both companies separately, but as part of one larger umbrella to be able to compete [with American companies],” said Gregson in an interview with The Globe and Mail.
“There has been lots of American [furniture companies] that have come up here. We have thrived, to date, against those companies, but we feel that this merger will help us to better compete.”
Gregson said that the two stores are physically different, and that there will be no closures of either Leon’s or The Brick branches once the merger is finalized.
“The Brick and Leon’s stores are quite different. A Leon’s store is much bigger, typically, than a typical Brick store, there’s a warehouse attached to it; and a Brick store pretends to be a showroom with no warehouse attached to it. The Brick has locations in many places where Leon’s isn’t. So, no, there’s no plan for store closures.”
Mark Leon, Leon’s Chairman of the Board, said that coupled with the merger and the pressure that is put on American companies to set up stores in Canada, that a healthy balance of competition will be installed.
“Do not forget, when [American companies] come north, they have to find land to buy, they have to put buildings on that land, they have to hire contractors to build those buildings, they have to hire people to work in those buildings; all those things put pressure on the workplace in general,” said Leon. “So, that’s the big issue when it comes to American expansion. We’re not afraid of anybody, we never have been and we never will be.” 

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