Signet Jewelers and Zale Corporation, a retail jeweler and a portfolio company of Golden Gate Capital, have entered into an agreement for Signet to acquire all of the issued and outstanding stock of Zale for $21 per share in cash or about $690 million. The transaction has an enterprise value of approximately $1.4 billion, representing an enterprise value to TTM Adjusted EBITDA multiple of 7.4x.
Zale Corporation (NYSE: ZLC) is a specialty retailer of diamond and other jewelry products operating approximately 1,680 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale’s brands include Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates webstores at www.zales.com, www.zalesoutlet.com, www.gordonsjewelers.com, www.peoplesjewellers.com, and www.pagoda.com. The company is headquartered in Irving, TX (www.zalecorp.com).
Signet is expected to finance the acquisition through bank debt, other debt financing and the securitization of a significant portion of Signet’s accounts receivable portfolio.
J.P. Morgan Securities is Signet’s exclusive financial advisor and provided a fairness opinion to its board of directors. J.P. Morgan Chase has committed to provide bridge financing for the transaction. BofA Merrill Lynch is acting as the exclusive financial advisor to Zale.
Signet Jewelers (NYSE: SIG) (LSE: SIG) is the largest specialty jewelry retailer in the US and UK. Signet’s US division operates over 1,400 stores in all 50 states primarily under the name brands of Kay Jewelers and Jared The Galleria of Jewelry. Signet’s UK division operates approximately 500 stores primarily under the name brands of H.Samuel and Ernest Jones. The company is headquartered in London, UK (www.signetjewelers.com, www.kay.com, www.jared.com, www.hsamuel.co.uk and www.ernestjones.co.uk).
Golden Gate Capital targets companies across a range of industries and transaction types, including leveraged buyouts, recapitalizations, corporate divestitures and spin-offs, build-ups and venture stage investing. The firm has approximately $12 billion of capital under management and is based in San Francisco (www.goldengatecap.com).
© 2014 PEPD • Private Equity’s Leading News Magazine • 2-20-14