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Signet Jewelers to buy Zale for $1.4 billion

Staff writer ▼ | February 20, 2014
Signet Jewelers has entered into a definitive agreement for Signet to acquire all of the issued and outstanding stock of Zale Corporation for $21 per share in cash consideration.
Signet Jewelers
Signet JewelersSignet Jewelers has entered into a definitive agreement for Signet to acquire all of the issued and outstanding stock of Zale Corporation for $21 per share in cash consideration.


"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," stated Mike Barnes, Signet's Chief Executive Officer.

The acquisition strengthens Signet's omni-channel presence with some of the most recognizable jewelry store brands in the world, each operating as stand-alone brands including: Kay Jewelers, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Zales, and Peoples.

Signet's offer represents a premium of 41% over Zale's closing price as of February 18, 2014. The transaction would be valued at approximately $1.4 billion, representing an enterprise value to last twelve months Oct-13 Adjusted EBITDA multiple of 7.4x2.

As part of the transaction, Signet has entered into a voting and support agreement with Golden Gate Capital, the beneficial owner of approximately 22% of Zale's common stock. The transaction is expected to be high single-digit percentage accretive to earnings in the first full fiscal year after the close of the transaction, excluding acquisition accounting adjustments and one-time transaction costs.

The acquisition is expected to be financed through bank debt, other debt financing and the securitization of a significant portion of Signet's accounts receivable portfolio.

The transaction is subject to Zale stockholder approval, certain regulatory approvals and customary closing conditions.


 

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