Despite opposition from a number of Zale shareholders who argued that Signet’s proposed purchase price undervalued the company, the majority of shareholders voted in favour of the deal during a meeting held last week.
The North American jewellery retailer was acquired for US$21 (AU$22.7) per share, or a total consideration of US$1.46 billion (AU$1.6 b).
Revenue of the new entity is expected to reach US$6.2 billion (AU$6.7 b) annually, with Signet now operating in more than 3,600 locations under the retail store brands of Kay, Jared, and Zales in the US; H.Samuel and Ernest Jones in the UK; and Peoples in Canada.
Signet will also operate kiosks in the US under the Piercing Pagoda brand.
An official statement released by Signet following the acquisition stated that Zale would continue to operate as a separate division under the Signet umbrella, and that CEO Theo Killion would maintain his position with the added title of Zale president.
Killion will now be responsible for US brands Zales, Gordon’s and Piercing Pagoda, as well as Canadian brands Peoples and Mappins, while reporting to Signet CEO Mike Barnes.
A number of other organisational changes were made following the acquisition, including the appointment of Mark Light as Signet’s president and chief operating officer.
The takeover hailed the end of an era for Zale, which had operated as an independent company since 1924. As previously reported by Jeweller, the Zale was quite successful until it made an “ill-fated” decision to offer more up-scale items in 2005. This resulted in a large loss of customers, a shortage of funds, and the eventual acquisition by Signet.
Multiple media sources have cited Jewelry Industry Research Institute president Ken Gassman as saying that the acquisition was positive for Zale.
“Zale needs a jewellery merchant to run it, and who better than Signet, which has been consistently successful over the years,” Gassman said. “This should assure the success of Zale.”
Going forward, Signet will be focusing on Vision 2020, which Barnes described as the company’s “road map for ongoing success”. The strategy will involve maximising jeweller’s mid-market performance, being “best-in-bridal” and improving its digital platform.
With more than 3,600 stores, the deal means Signet’s store count far outweighs that of China’s Chow Tai Fook, which currently operates 2,000.
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