Mayor’s Jewelers Inc., Sunrise, Fla., announced on May 20 that it had reached an agreement in principle with Henry Birks & Sons Holdings Inc., a leading designer, manufacturer, and retailer of fine jewelry in Canada, to take control of Mayor’s.
Under the agreement, Birks will pay Mayor’s $11.5 million for 58% of common stock, and will have the option of purchasing an additional 10% of the common stock at $50 per share. Birks will be able to elect a majority of the board of directors of Mayor’s.
Under a series of agreements between the two companies, Birks will provide management, merchandising, and sales support to Mayor’s. Completion of the transaction is subject to certain conditions, including execution of definitive agreements (which the parties hope to accomplish in June) and a vote by Mayor’s stockholders. The transaction with Birks was unanimously approved by the directors of Mayor’s.
“We have been searching for strategic alternatives for over a year without acceptable results and we believe that our arrangement with Birks gives us the best opportunity to enhance shareholder value when compared to other alternatives we have explored,” said Joe Cicio, CEO of Mayor’s.
“We are excited about our new relationship with Mayor’s. It brings to us the opportunity to participate in the U.S. market and to build on the strong luxury franchise and reputation for quality that Mayor’s has built over 90 years,” Thomas A. Andruskevich, CEO of Birks, said in a statement.
Mayor’s says it will continue to proceed with its previously announced restructuring plan that includes closing 13 of its 41 stores to boost company profitability. Mayor’s employs 600 people at stores in Florida and Georgia (its two core markets), as well as Texas, Illinois, Virginia, Michigan, Nevada, Arizona, and California.
Mayor’s has struggled during the past 12 months. Late last year the company put its 131,000-sq.-ft. corporate office/warehouse/distribution center complex up for sale. It also laid off more than half of its 350 employees at corporate headquarters.
The company reported a net loss of $83.9 million, or $4.32 loss per diluted share, for the 2001 fiscal year ended Feb. 2. That compares with a net income of $20.2 million for the same period a year ago.