Zale Acquisition Vote Goes Down to Wire

Zale shareholders are due to vote on its acquisition by Signet on Thursday—as the deal’s supporters and opponents spent the home stretch trying to rally undecided investors to their side.

The vote on Signet’s $21-a-share bid for Zale will take place on May 29, at 8 a.m. Central time. Investment firm TIG Advisors, a 9.5 percent shareholder in Zale, has rallied investors against the acquisition, urging them either to vote against the deal or abstain from casting a ballot, thereby pushing back approval.

As the day of the vote approached, both sides received good and bad news.

A judge in Delaware declined requests from attorneys in shareholder class actions to stop the acquisition, according to Law360. The judge ruled there was no proof that shareholders would suffer “irreparable harm” from the deal, the site said.

On the other hand, Gabelli Funds, a 7.45 percent shareholder that has indicated it may vote against the deal, declared that it is considering seeking appraisal rights under Delaware law, which could spark further litigation.

In addition, two independent shareholder proxy companies came down on different sides of the proposed deal.

Egan-Jones Proxy Services recommended Zale’s investors vote in favor, writing that the deal is “in the best interest of the company and its shareholders.” Another proxy advisor, Institutional Shareholder Services, last week recommended a vote in favor of the deal.

However, a third company, Glass Lewis, broke ranks by recommending a vote against the deal. While JCK could not get a copy of that report, according to a TIG statement, it concludes shareholders would be better served by “a more robust strategic review and—in the absence of a compelling alternative—the continued pursuit of Zale’s stand-alone operating plan.”

It reportedly adds that Signet is getting “a deal” with its purchase of Zale, due to a flawed review process, which did not involve engagement with other possible bidders, and was marred by conflicts of interest involving board member Golden Gate Capital and Bank of America, which had contacts with both sides in the transaction.

Zale wasted little time in responding, saying that the board weighed all strategic alternatives to a sale. Its statement adds that that while an overseas party—which JCK reported was Gitanjali—approached the board about a possible acquisition, that Indian company never put together a formal valuation. It added its board is “strong and independent,” and that it had determined that Bank of America did not have a conflict before enlisting it.

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JCK News Director