Signet Jewelers

Signet Jewelers Acquires Zales

Signet Jewelers Limited announced the purchase of Zale Corporation for $690 million in cash.  The combined company will have roughly $6.2 billion in annual sales and 3600 stores on two continents.  The transaction will value at approximately $1.4 billion including Zale Corporation debt. Aldo, according to the agreement, Signet will absorb all of Zale's issued and outstanding shares at 21 each in cash.  Signet's offer represents a premium of approximately 41% over Zale's closing price of $14.91 on February 18 of 2014.  The company has also entered into a voting and support agreement with Golden Gate Capital, the beneficial owner of almost 22% Zale's common stock.

Signet Jewelers and Transforming the Company

According to Michael Barnes, Signet's CEO "this transformational acquisition further diversifies our business and extends our international footprint, opening the door to greater growth and innovation across the enterprise.  Furthermore, 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 make us a more attractive partner to our vendors. Additionally, it allows us to better optimize our balance sheet, creating long-term value for our shareholders."  Signet for now, intends on keeping the Zale brand-name; Theo Killion, Zale's CEO, will continue to run Zale and report to Barnes once the acquisition is completed.  Killion explains, "having successfully completed our multiyear 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." http://www.forbes.com/sites/maggiemcgrath/2014/02/19/signet-jewelers-acquiring-zales-owner-in-1-4-billion-deal/

Increased Value

Based in Bermuda, Signet has approximately $3.98 billion in sales in 2013.  It operates approximately 1900 stores.  Including, Kay jewelers and Jared The Galleria of Jewelry in the United States and H. Samuel and Ernest Jones of the United Kingdom.  Kay Jewelers contributed almost $2 million in sales the year 2013; Jared The Galleria Of Jewelry contributed almost $1 billion in sales revenue.  Additionally, Zales reportedly made sales to the tune of $1.89 billion in the fiscal year that ended on July 31, 2013. Based out of Irving, Texas Zale's has approximately 1700 stores including Zales and Gordon's Jewelers in the United States and Peoples Jewellers in Canada.  Moreover, it is reported that CEO Michael Barnes is attempting to strengthen their bridal market sector according to popular women's magazine Women's Wear Daily, he is quoted as saying that he wants to "accelerated penetration of the bridal market a, Zale strength." Also, key parts of the Zale's bridal portfolio are the Vera Wang jewelry line, Love and Celebration Diamond collections.  The new Signet will represent approximately a 16% market share of the jewelry retail market in the United States.  As well as the market leader in the United Kingdom.  And now it is poised to become the largest player in Canada of Zale.  The purpose of this acquirement is to create a global platform that could support future geographic expansion.

Signet Jewelers and Symbiotic Operations

Signet anticipates the generating of approximately $100 million after the merging operations synergize.  Additionally, this is expected to take place in 2017 during its third fiscal year.  Analyst Ike Boruchow believes savings will exceed the predicted amount of $100 million. Furthermore, he mentions "total synergies could reach 175 million by our estimation." As well as other debt financing and the securitization of a significant portion of Signet's accounts receivable portfolio.  The transaction is subject to the regulatory and Zale shareholder approval.