TORONTO – Storied Canadian furniture retailer Leon’s is buying high-profile rival The Brick in a $700-million friendly deal aimed at fending off U.S. competitors making inroads in Canada.

With American retail giants such as Walmart and Target threatening their share of the marketplace, the two Canadian companies announced Sunday a deal that would see Leon’s take ownership of The Brick but operate the two under separate banners.

The deal also comes amid a tough economic climate for furniture retailers with a number of factors, including a softening housing market, taking a toll on sales.

In a joint release, Leon’s Furniture Ltd. (TSX:LNF) says it will pay $5.40 per share. Friday’s closing price on Brick (TSX:BRK) stock on the Toronto Stock Exchange was $3.50.

The two chains are facing new competitors, chiefly in the form of American retail giant Target, which plans to begin opening up to 135 stores across Canada in the coming year. Walmart is adding 73 stores across Canada in the coming months, including 28 former Zellers stores.

The acquisition of The Brick would will strengthen Leon’s position in the home furnishing marketplace, said Leon’s CEO Terry Leon in a release. Continue…