The board of directors of the world’s largest specialty retail jeweler is attempting to move its primary listing of shares from the London Stock Exchange to the New York Stock Exchange and move its headquarters from London to Bermuda.
Signet Group plc said in a note to shareholders it believes the proposal “is in the best interests of Signet and its shareholders taken as a whole.” Adding that, “this is the natural next step in the evolution of Signet’s shareholder base, which has seen a steady growth in U.S. ownership since 2003, including a significant increase over the last 12 months.”
Nearly 50 percent of Signet’s voting securities are now owned by U.S. residents, the board said. “The proposal will align the place of listing with the majority of the group’s business activities,” the statement said.
In addition, more than 70 percent of Group sales, operating profit and net assets, are in the U.S.
“The Board considers there to be a potentially larger pool of investors in the U.S. than in the U.K. who are more familiar with the Group’s business model, have a better understanding of the underlying economic environment in the US and a lower exposure to foreign exchange movements impacting the value of their investment,” the statement says. “In addition, the Board expects that the new parent company would benefit from its primary listing being amongst a more appropriate public company peer group.”
The board said it remains committed to the U.K. jewelry market and will continue to encourage U.K. and European share ownership and investment by applying for a secondary listing on the LSE.
In order to trade on the NYSE, the company could not be headquartered in England or Wales. So the board agreed that the company should be moved to Bermuda, which it said is a “well-established jurisdiction for companies traded on the NYSE and included in U.S. domestic stock indexes such as Standard & Poors.”
A move the Bermuda, as opposed to the U.S., would result in a much smoother transition in regards to legal and regulatory compliance; and capital and financial positions; and it would be a tax benefit.
The name of the new parent company will be Signet Jewelers Limited and it will report under U.S. Generally Accepted Accounting Principles, the board said. Summary five year records derived, in part, from the audited accounts for the Group prepared under US GAAP are available on Signet’s Web site at www.signetgroupplc.com .
The proposal will be implemented through the high court of England and Wales and will therefore be subject, among other things, to approval by Signet shareholders at a general meeting, and approval by Signet shareholders at a separate court convened meeting, and sanction by the court. These two shareholder meetings are intended to be held on or about Aug. 19.
As part of the proposal, it is also intended that Signet Jewelers Limited implements a one-for-twenty share capital consolidation (also known as a reverse stock split) immediately after the proposal arrangement becomes effective.
“Such a share capital consolidation should cause the shares in Signet Jewelers Limited to trade initially on the NYSE at a price more readily comparable to its peers,” the board said.