Diamonds are a girl's best friend, and the same could be said for Signet Jewelers. The parent company of Kay Jewelers and Jared the Galleria of Jewelry, announced their plans to acquire the Zales Corporation on February 19th. According to the New York Times, the asking price was just right at $690 million. Signet Jewelers believe the new merger will build help build the company's economic portfolio, and expand it's presence in the jewelry industry throughout the United States and Canada.
While many people think of mergers and corporate buyouts, one thing typically comes to mind: financial crisis, especially in the case of the company being sold. We typically imagine stockholders frantically selling their company shares in an attempt to "abandon ship." In the case of the Zales Corporation and Signet Jewelers, that really isn't true. Within the last couple of days following the announcement of the merger, Zales stock experienced significant gains in regard to the New York Stock Exchange. As of 5:00 pm on February 24th, the company reported a financial gain of 0.64% with the Dow and 0.69% with the Nasdaq. Signet Jewelers' stock stayed pretty much the same throughout the day, with only an average loss of 0.06% at the close of business. These figures really don't seem like that big of a deal, but they are a stark comparison to Zales' economic performance in the years following the national economic downturn. In fact, Zales Corporation had a record profit of $10 million for 2013, it's highest rate of profit since 2007. It seems that especially Zales stockholders had much to be excited about in regard to the recent merger and the NYSE results within the last several days since the deal with Signet Jewelers.
"They were very open to our approach," Signet Jeweler's CEO Michael W. Barnes stated about Zales stockholders. "They have been extremely collaborative."
Barnes said he has been contemplating about a merger between the two companies since he became CEO of Signet Jewelers three years ago, and is very excited to see his vision become a reality. Signet Jewelers had been in discussion with the Zales Corporation for several months in regard to the merger. The merger is still subject to approval by Zales Corporation shareholders, but it seems to be a smooth process so far.
For consumers, it doesn't seem very much will change in the near future in regard to Zales locations. Signet Jewelers have publicly expressed their desire to continue the Zales name and association. Additionally, Signet Jewelers will also acquire access to brands that were formerly exclusive to Zales Jewelers, such as the Vera Wang Love Collection and the Celebration Diamond line. Ideally, it seems that Signet Jewelers will be able to provide a wider range of selection throughout all locations. Zales Corporation also owned Piercing Pagoda, which will also become an asset of Signet Jewelers.
Shortly after the news of the marriage of Signet Jewelers and Zales Corporation, internet chatrooms were abuzz; many Zales customers are concerned that the Zales retail outlets will lose their unique style of personalized customer service. However, Signet Jewelers haven't defined any future plans to change customer service or sales policies. Fine jewelry enthusiasts will just have to wait and see what is in store for the Zales brand.
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