Canada's Condominium Magazine

Business as usual as Leon’s acquires The Brick?

Two of Canada’s best known furniture and appliance retail rivals, The Brick and Leon’s, are now officially one. The two chains announced today that their union has been consummated, and Leon’s has acquired all outstanding common shares of The Brick. The Brick will be delisted from the TSX by April 1. Earlier this month the Competition Bureau of Canada ruled that the merger of the two competitors would not have the effect of reducing competition in the marketplace. The Bureau was satisfied that shoppers at the newly merged entity will not face higher prices.

sale-Leon's-TheBrick-merger-takeover-Canadian-retail-competition-WalMart-Sears-Home-Depot-furniture-appliances-mattresses-Condo.ca
Leon’s has taken over rival retailer The Brick, with three times more stores. Will the new reality mean more deals for shoppers?

In fact, the $700 million takeover of The Brick by Leon’s was driven by increasing competition in the retail sector, as reported by the CBC. Terry Leon, the CEO of Leon’s Furniture, said that the move was meant to help the companies deal with giants like IKEA, Wal-Mart, which is planning to open no less than 73 more of its giant-box stores in Canada in the coming months, and Target, just now entering the Canadian market with a planned 135 new stores across the country in the next year or so. As well, there are the players already established in the appliances and furniture market, Home Depot, Future Shop, The Bay, Sears.

With respect to effective remaining competition, the Bureau concluded that a number of national and regional retailers had overcome the barriers identified above, and that there would be sufficient effective competition to the merged entity in each of the local markets identified. The Bureau’s conclusion on effective remaining competition is based not only on extensive market contacts and a review of the parties’ internal documents, but also on an empirical analysis of the impact that each of a large number of national and regional furniture and/or mattress retailers have on the pricing of the parties.

Competition Bureau Position Statement

Leon said that the new entity will have access to “national buying opportunities in merchandising and marketing, and a national distribution network that will enable us to greatly enhance our online shopping capabilities.” Will it also mean more deals for customers? That might not happen.

It appears that the two brands will continue to operate separately, under separate management. The distinctiveness of the two brands, which extends to the product lines they sell, could mean there will be little opportunity for price reductions for consumers, according to some analysts. One analyst quoted in the Globe and Mail said that Leon’s will likely close “10 overlapping stores” and boost its margins through the new buying power it will enjoy as a result of the acquisition.

The Brick currently has 230 stores across Canada; Leon’s, which dates back to 1909, has 76 stores.

Other Popular Stories

Living happily ever after in a condo: Top 5 “Happiness Factors” to consider before buying a condo; it’s not what you think

Living happily ever after in a condo: Top 5 “Happiness Factors” to consider before buying a condo; it’s not what you think

The condominium market is increasingly the go-to choice for urban dwellers, with the price of detached houses now out of reach for many. Condo living have distinct advantages in this hot market. It also has its own unique issues, starting with how to find a reputable builder/developer management company — and the 4 other “Happiness…

Social housing crisis — With a wait list of 181,000, what help is in sight for the proposed shut down of 1000 TCHC units?

Social housing crisis — With a wait list of 181,000, what help is in sight for the proposed shut down of 1000 TCHC units?

The pending Rental Fairness Act attempts to protect the 1.2 million rental householders in Ontario. But there are 181,000 people on the social housing waiting lists in Toronto alone that apparently have no relief in sight — with Toronto’s plan to shut down another 1000 units. The Ontario government may not be directly responsible for…

Rental Fairness Act: Act of kindness, or barrier to affordable housing? Either way, it will change everything for renters.

Rental Fairness Act: Act of kindness, or barrier to affordable housing? Either way, it will change everything for renters.

With 1.2 million rental households in Ontario, frequently rented from condo-owners, the stakes are high for Ontario residents in a “fairness” rental act. Ontario is following through on their announcements of rent control reform. A news release from Ontario’s Ministry of Housing makes it clear The Rental Fairness Act, 2017, is a coming reality. It’s safe…

SHARE WITH US

Subscribe to condo.ca

@ 2017 condo.ca  |  Designed by Persona Corp