Signet tightens grip on US market with $690m Zale purchase

The US owner of British jewellery chains H Samuel and Ernest Jones has inched closer to market domination with the acquisition of smaller American chain Zale for a reported $690m (£414m).

In a statement, Signet said it had stumped up for a $21-per-share cash deal, which represented a 41 per cent premium on Zale Corporation’s share price ahead of the sale.

Zale Corporation currently has around $500m of debt on its books, the liability for which has been taken on by Signet as the deal is for 100 per cent equity in the firm. Taking account of this, Signet’s purchase price values Zale at around $1.4bn (£840m).

The combined revenue of the two firms totals more than $6bn annually.

Mike Barnes, CEO of Signet, 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.”

Barnes confirmed that Zale’s current chief executive, Theo Killion, would remain in post. He will report directly to Barnes immediately after the acquisition is completed.

Killion added: “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 transaction remains subject to Zale stockholder approval, and certain regulatory approvals, but is not expected to meet any obstacles.

Image: Dwight Burdette