Zale Reiterates Commitment to Transaction with Signet Jewelers
15 Maggio 2014 - 2:30PM
Business Wire
Transaction Provides Compelling and
Immediate Value to Zale Stockholders
Zale Files Detailed Investor
Presentation
Zale Corporation (“Zale” or the “Company”) (NYSE: ZLC) today
reiterated its commitment to the pending merger with Signet
Jewelers Limited (“Signet”) (NYSE: SIG), under which Zale
stockholders would receive $21.00 per share in cash. The
transaction, which was unanimously approved by the Zale Board of
Directors, represents the result of a thorough process that
included a comprehensive review of strategic and other alternatives
and extensive negotiations with Signet.
On May 13, 2014, Zale filed a detailed investor presentation
with the U.S. Securities and Exchange Commission (“SEC”) in order
to provide all stockholders with additional information associated
with the proposed Signet transaction. The presentation is available
on the SEC’s website at www.sec.gov and the Company’s website at
www.zalecorp.com/merger.
In reiterating its support for and recommending that Zale
stockholders vote in favor of the Signet transaction at the May 29,
2014 special meeting of stockholders, Zale notes the following:
- Signet's $21.00 cash per share price
provides compelling and immediate value to Zale stockholders.
Signet’s offer represents a 41% premium over both Zale’s closing
stock price on February 18, 2014, the day prior to the public
announcement of the transaction, and the Company’s three month
volume weighted average closing price. It also represents an 85%
premium over the volume weighted average closing price of Zale’s
stock over the twelve-month period ended February 18, 2014 and a
valuation of 18.5 times Zale's EBITDA for the twelve-month period
ended January 31, 2014.
- Zale’s strong and independent Board,
with substantial retail and jewelry industry experience,
unanimously approved the transaction with Signet. The Zale
Board conducted a thorough process, which included the
consideration of other potential buyers and extensive negotiations
with Signet that resulted in price increases from Signet’s initial
offer of $19.00 per share to $21.00 per share. Further, the
interests of Golden Gate Capital, the Company’s largest stockholder
with a 23% ownership stake and with two seats on the Zale Board,
are fully aligned with the interests of all other Zale stockholders
in seeking maximum value for Zale shares.
- There is significant risk and
uncertainty to achieving Zale’s three-year business plan, which was
designed as a stretch plan to challenge management. The Zale
Board evaluated the $21.00 cash per share offer price relative to
the risks, uncertainties and challenges associated with the
achievement of the Company's three-year business plan. These
factors included, among other things, macroeconomic conditions,
commodity price volatility, competitive threats, the Company’s
highly levered capital structure, and the Company’s aging
infrastructure. In addition, achievement of the three-year business
plan assumes successful and timely execution of several new,
critical business initiatives. The challenging nature of the
three-year business plan was recognized by the Board in
establishing the long-term incentive plan. Achievement of the
FY2016 EBITDA plan of $200 million would result in a maximum
incentive payout (200%) with the target incentive payout (75% -
125%) set at 77% achievement of the FY2016 EBITDA plan. The board
also considered an Alternative Case which represented a slightly
less ambitious plan, but still reflects significant improvement in
revenue growth and operating margins; achievement of the
Alternative Case in FY2016 would result in an incentive payout in
excess of the target incentive payout range.
EBITDA (dollars in
millions)
FY12 FY13 FY14 FY15
FY16 FY14-16 Growth Rates Actual $56 $68 - - -
Business Plan - - $92 $124 $200 117%
Alternative Case
- - 90 115 172 91%
Signet's $21.00 per share all cash
consideration provides certainty of value and eliminates the risks
to Zale stockholders of failing to achieve the Company’s three-year
business plan.
- Since the transaction was announced
on February 19, 2014, no other parties have expressed interest in
acquiring Zale. The merger agreement allows the Zale Board to
consider unsolicited alternative proposals that could create
greater value for Zale stockholders. In the nearly three months
since the Signet transaction was announced, there have been no
competing offers submitted.
- Importantly, there is risk of a
material decline in the Company’s share price if the transaction
does not close, particularly in light of the significant
increase in the Company’s share price that occurred subsequent to
the transaction announcement.
YOUR VOTE IS IMPORTANT - PLEASE VOTE
FOR THE SIGNET TRANSACTION TODAY
Your vote is extremely important, no matter how many or how few
shares you own. The affirmative vote of holders of a majority of
Zale’s outstanding shares is required to approve the proposal to
adopt the merger agreement. Failing to vote has the same effect as
a vote against the proposal to adopt the merger agreement. Please
take a moment to vote FOR the
proposal to adopt the merger agreement today - by telephone, by
Internet or by signing, dating and returning the enclosed proxy
card in the postage-paid envelope provided.
For more information, please see Zale’s definitive proxy
statement, which was filed with the SEC on May 1, 2014. Zale urges
all stockholders to review the definitive proxy statement and other
materials as they contain important detailed information about the
merger agreement and the reasons why the Zale Board approved the
merger agreement. Stockholders who have any questions or need
assistance voting their shares should contact Zale’s proxy
solicitor, D.F. King & Co., Inc., toll-free at (800) 488-8095
or via email at zale@dfking.com.
About Zale
Zale Corporation is a leading specialty retailer of diamond and
other jewelry products in North America, operating approximately
1,680 retail locations throughout the United States, Canada and
Puerto Rico, as well as online. Zale Corporation's brands include
Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers,
Mappins Jewellers and Piercing Pagoda. Zale also operates webstores
at www.zales.com, www.zalesoutlet.com, www.gordonsjewelers.com,
www.peoplesjewellers.com, and www.pagoda.com. Additional
information on Zale Corporation and its brands is available at
www.zalecorp.com.
Safe Harbor for Forward-Looking Statements
Any statements in this communication about Zale’s expectations,
beliefs, plans, objectives, prospects, financial condition,
assumptions or future events or performance that are not historical
facts, including statements regarding the proposed acquisition of
Zale by Signet (the “proposed transaction”) and the expected
timetable for completing the proposed transaction that are not
historical facts, are forward-looking statements. These statements
are often, but not always, made through the use of words or phrases
such as “believe,” “anticipate,” “should,” “intend,” “plan,”
“will,” “expect(s),” “estimate(s),” “project(s),” “positioned,”
“strategy,” “outlook” and similar expressions. All such
forward-looking statements involve estimates and assumptions that
are subject to risks, uncertainties and other factors that could
cause actual results or events to differ materially from those
expressed in the statements. Among the key factors that could cause
actual results to differ materially from those projected in the
forward-looking statements, are the following: the parties’ ability
to consummate the proposed transaction on the expected timetable or
at all; the conditions to the completion of the proposed
transaction, including the receipt of stockholder approval;
operating costs, customer loss and business disruption (including
difficulties in maintaining relationships with employees,
customers, competitors or suppliers) may be greater than expected
following the announcement of the proposed transaction; the
retention of certain key employees of Zale may be difficult; Zale
is subject to intense competition and increased competition is
expected in the future; and general economic conditions that are
less favorable than expected. Additional information and other
factors are contained in Zale’s Annual Report on Form 10-K for the
fiscal year ended July 31, 2013 and subsequent reports on Form 10-Q
and Form 8-K filed with the Securities and Exchange Commission
(“SEC”). Because the factors referred to above and other risk
factors, including general industry and economic conditions, could
cause actual results or outcomes to differ materially from those
expressed or implied in any forward-looking statements, you should
not place undue reliance on any such forward-looking statements.
Further, any forward-looking statement speaks only as of the date
of this communication, based on information available to Zale as of
the date hereof, and Zale disclaims any obligation to update any
forward-looking statement to reflect events or circumstances after
such date.
Use of Non-GAAP Financial Measures
This communication contains a non-GAAP measure as defined by SEC
rules. This non-GAAP measure is EBITDA, which is defined as
earnings before interest, income taxes and depreciation and
amortization. We believe this measure could be useful in evaluating
the merger. This non-GAAP measure should not be considered in
isolation from, or as a substitute for, financial information
presented in accordance with GAAP, including net earnings (loss).
The Company's calculation of this non-GAAP measure may differ from
others in its industry and is not necessarily comparable with
similar titles used by other companies. Please refer to the
appendix of the Company’s investor presentation, which is available
on the Company’s website at www.zalecorp.com/merger and is an
exhibit to the Current Report on Form 8-K filed with the SEC by the
Company on May 13, 2014, for a reconciliation of this non-GAAP
measure to the most comparable GAAP financial measure.
Zale CorporationRoxane Barry, 1-972-580-4391Director of Investor
RelationsorD.F. King & Co., Inc.Kristian Klein,
1-212-232-2247orJoele Frank, Wilkinson Brimmer KatcherMatthew
Sherman, Kelly Sullivan or Eric Brielmann, 1-212-355-4449
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