In a union of the two largest mall-based retailers in the jewelry sector, Signet Jewelers Ltd. has agreed to acquire Zale Corp.
Zale shareholders would receive $21 a share in cash, valuing the purchase at $1.4 billion, including debt, and creating an enterprise with projected annual sales of about $6.2 billion and more than 3,600 stores on two continents.
The deal combines Signet’s 1,954 stores in the U.S. and U.K., with brands including Kay Jewelers, Jared and H. Samuel, with Zale’s footprint in the U.S. and Canada, where it operates 1,694 stores under brands including Zales and Peoples. Signet’s sales during the fiscal year ended in February 2013 were $3.98 billion while Zale’s volume reached $1.89 billion in the fiscal year ended in July.
The $21 price provides Zale shareholders with a 40.8 percent premium over the $14.91 closing price of shares on Tuesday. The stock gained 39.8 percent to $20.85 in pre-market trading Wednesday. Signet shares closed at $79.27 Tuesday and were up 10.9 percent to $87.95 in Wednesday’s pre-market trading.
The transaction is expected to be financed through bank debt and other debt financing and securitization of “a significant portion of Signet’s accounts receivable portfolio,” Signet said. It already has the support of Golden Gate Capital, holders of 22 percent of the common stock of Dallas-based Zale, and is subject to the approval of Zale’s stockholders, regulatory approvals and other standard closing considerations.
"This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise,” said Mike Barnes, Signet’s chief executive officer. “The addition of Zale to the Signet family is consistent with our long-term growth strategy and leverages our combined operating expertise to create better choices for our customers, new opportunities for our employees, and makes us a more attractive partner to our vendors. In addition, it allows us to better optimize our balance sheet, creating long-term value for our shareholders."
Theo Killion will continue to run Zale as ceo and report to Barnes.
“Having successfully completed our multiyear turnaround program to return to return to profitability, Signet’s operating strengths will enable us to accelerate Zale’s performance improvement for the benefit of our current and future guests,” Killon said.
In a presentation to investors, Signet said that its Kay nameplate’s sales were about $2 billion, making it the top jewelry store in the U.S. Jared’s sales were pegged at about $1 billion, making it the top off-male specialty jeweler in the U.S. In the U.K., Signet’s H. Samuel and Ernest Jones brands were pegged at numbers one and two, doing $400 million and $300 million in sales, respectively.
J.P. Morgan Securities LLC advised Signet on the deal and J.P. Morgan Chase Bank N.A. committed to bridge financing. BofA Merrill Lynch advised Zale.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye