HomeBase Shares Up on Merger Speculation

HomeBase Inc. shares rose 10% Friday on speculation that competitor Lowe’s Cos. will buy the Irvine building-supplies retailer for $14 a share, or about $530 million. HomeBase stock closed at $10, up 94 cents a share, in trading of 1.01 million, more than three times its three-month daily average. The retailer’s shares have surged 29% since Wednesday. Analysts discounted the merger speculation, however, noting that Lowe’s management has stated it wouldn’t buy a home-improvement retailer with stores that don’t conform to its standards. Lowe’s, the second-largest U.S. home-improvement chain behind Home Depot Inc., has been building stores in excess of 100,000 square feet. HomeBase’s stores average 80,000 square feet. Shares of North Carolina-based Lowe’s fell 81 cents to $42.19.