Signet (Kay Jewelers), Zale end merger talks

Thursday, March 11, 2010

Britain-based specialty jeweler Signet Group PLC, operator of Kay Jewelers and other mall-based chains, and U.S.-based jewelry chain Zale Corp. said Monday that talks about a possible merger have ended. Zale Corp. also confirmed talks have ended.

Signet and Zale's statements came after published reports that London-based Signet, the world's largest specialty jewelry retailer, might combine with Zale, the second largest jeweler by revenue in the U.S. Citing unnamed sources.

Signet, which runs H. Samuel and Ernest Jones shops in Britain had said in a statement earlier it had held "preliminary discussions with Zale Corp regarding a possible merger," adding "at this early stage, there is considerable uncertainty as to whether any transaction will be forthcoming."

The Mail on Sunday newspaper had said that Zale had approached Signet about a deal and that a takeover by Signet of its smaller rival was the most likely outcome.

The United States accounts for three quarters of Signet's sales. It has more than 1,200 U.S. stores under the names Kay Jewelers and Jared the Galleria of Jewelry, with 8 percent of the U.S. market. In Britain it has just under 600 stores.

Zale, which operates about 2,300 stores in the United States, has suffered a series of recent setbacks, including the January departure of Chief Executive Mary Forte, a probe by the U.S. Securities and Exchange Commission into its accounting policies, and a decision last month to place its chief financial officer on administrative leave.

Signet changed its name from Ratners in 1993 after its then boss, Gerald Ratner, made one of most famous gaffes in British corporate history by describing one of the company's products as "total crap."

The Daily Telegraph newspaper said on Monday that Ratner was interested in buying back H. Samuel if it became available. Ratner was not immediately available for comment.

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