US giant enters agreement to acquire rival retailer’s 750 stores.
Signet Jewelers Limited, owner of H Samuel, Ernest Jones and Leslie Davis stores in the UK, has entered into a "definitive agreement" to acquire US retail jewellery chain Zale Corporation for a reported $1.4 billion (£840m).
According to Signet, the transaction brings together two leading jewellery retailers to form six recognisable retail brands across three countries. As part of the agreement, Signet will acquire all of the issued and outstanding stock of Zale for $21.00 per share in cash consideration.
Zale operates more than 750 stores in the US and Puerto Rico, with Signet anticipating the acquisition to bring additional business of about $100 million (£60m) a year within three fiscal years.
Signet’s offer represents a premium of 41% over Zale’s closing price as of February 18, 2014. The transaction is valued at approximately $1.4 billion.
Signet chief executive Mike Barnes said: "This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise.
"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. We are excited about the prospects for the combined company and the many opportunities that this creates for our future. I am happy to say it is our intention that Zale will continue to run under current leader CEO, Theo Killion, who would report directly to me after the transaction closes."
The company said that the acquisition "strengthens Signet’s omni-channel presence with some of the most recognisable jewellery store brands in the world"; in the US it operates Kay Jewelers, Jared The Galleria Of Jewelry and Peoples and in the UK H.Samuel, Ernest Jones, and now Zales in the US and Puerto Rico.
Theo Killion said of the agreement: "Having successfully completed our multi-year turnaround program 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."
The acquisition is expected to be financed through bank debt, other debt financing and the securitisation of a significant portion of Signet’s accounts receivable portfolio.