Signet Jewelers to Zale Corp.: ‘Will you be mine?’

Signet Jewelers Ltd., a giant in the retail jewelry business, has agreed to acquire Zale Corp. in a deal the companies valued at $1.4 billion.

Signet, which operates more than 1,400 Kay Jewelers and Jared the Galleria of Jewelry stores, will add Zale’s 1,680 stores in the United States, Canada and Puerto Rico to its portfolio.

Zale chief Theo Killion will continue to run the company after the acquisition, Signet Chief Executive Mike Barnes said. He will report directly to Barnes.

“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 said in a news release. “In addition, it allows us to better optimize our balance sheet, creating long-term value for our shareholders.”

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Signet is paying $21 a share to acquire Zale of Irving, Texas, a 41% premium above Zale’s Tuesday closing price.

Shares of both companies skyrocketed on the news. Signet was up $13.53, or 17%, to $92.80 at 8:15 a.m. PST. Zale was up $5.98, or 40%, to $20.89.

Signet said it expects to finance the acquisition through bank debt, other debt financing and the securitization of a significant portion of its accounts receivable portfolio.

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

In addition to its U.S. stores, Signet operates about 500 H. Samuel and Ernest Jones jewelry stores in Britain. Based in Bermuda, the company has nearly 18,000 employees.
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