The Zale Corp., North America’s largest jewelry retailer, confirmed it has ended merger talks with the London-based Signet Group, the world’s largest jewelry retailer, as first reported earlier by JCK.
The Zale statement said June 12 that its board of directors “terminated the discussions, having concluded that its shareholders are best served by continuing as an independent company.” It said the board “remains focused on driving shareholder value as its first and foremost goal.”
Earlier, as reported by JCK during the afternoon of June 12, Walker Boyd, the Signet Group finance director, confirmed there were “some discussions about a possible merger, but these talks have ended and gone no farther.”
Zale is in the process of “putting the pieces in place to regain market share and improve profitability and have strengthened leadership in key operating units,” said Betsy Burton, Zale Corp.’s acting chief executive officer. “Our management team is fully focused on preparing the company for the 2006 holiday season, having developed a sound ‘back to basics’ plan for accomplishing its key strategic objectives.”
She said that “given the company’s strong potential as a stand-alone business, executing that strategy offers the best prospect for enhancing shareholder value.” The company statement also said it will announce the results of its search for a permanent CEO “within the next several weeks.”
The talks between Signet and Zale were originally revealed June 11, without attribution, in Britain’s Mail on Sunday newspaper. Shortly after that, Signet’s board of directors issued a brief statement confirming the report. It said that, following “press speculation,” the Signet Group “confirms that it has held preliminary discussions with Zale Corp. regarding a possible merger. However, at this early stage, there is considerable uncertainty as to whether any transaction will be forthcoming.”
Even so, that announcement caused stock shares of both companies to rise on June 12. Some industry analysts, reported Reuters, speculated if there was a merger, Signet might re-list itself as a U.S. company on the New York Stock Exchange and “spin off its UK operations.” Over 75 percent of Signet’s revenues come from Sterling Inc., headquartered in Akron, Ohio, its U.S. operation. Signet’s chairman is American Terry Burman, formerly head of Sterling Inc.
The Mail on Sunday report claimed it was Zale Corp. that approached Signet a few months ago.
Zale Corp. has 2,345 retail locations throughout the United States, Canada and Puerto Rico. Its brands include Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Bailey Banks & Biddle, Piercing Pagoda and (in Canada) Peoples Jewellers and Mappins Jewellers. Through its ZLC Direct organization, Zale also operates online at www.zales.com and www.baileybanksandbiddle.com.
The Signet Group has 1,246 in the United States operated by Sterling Inc., North America’s second largest jewelry retailer, under the names of “Kay Jewelers,” “Jared The Galleria Of Jewelry,” and under a number of regional names. Anther 591 stores are in the United Kingdom, where they trade under the names “H. Samuel,” “Ernest Jones,” and “Leslie Davis.”