NEW YORK (TheStreet) - It's a late Valentines for Zale Corporation (ZLC) shareholders. The Dallas, Texas based jeweler said on Wednesday it agreed to be bought by Signet Jewelers (SIG) in an all cash deal, worth $21 a share, that comes at an over 40% premium to Tuesday closing share prices.
The $21-a-share deal values Zale Corporation at about $1.4 billion when counting the company's debt and could cement a strong run in stock markets by the jeweler. Prior to Wednesday, Zale shares had gained over 200% in the past 12-months. Still, the company's takeover comes at a price that is well below the company's pre-financial share price highs in excess of $30 a share.
Zale operates over 1,000 specialty retail jewelry stores around the U.S., Canada and Puerto Rico and a over 600 jewelry kiosks in its footprint as well. The company turned to profitability in 2013 after a series of annual losses in the wake of the Great Recession.
For Bermuda-based Signet Jewelers, the deal is a major push into the North American jewelry retail market. "This transformational acquisition further diversifies our businesses and extends our international footprint, opening the door to greater growth and innovation across the enterprise," Mike Barnes, Signet's CEO, said in a statement.
Barnes added that the deal will better optimize Signet's balance sheet, and further said that Zale CEO Theo Killion would continue to work with the combined company after the acquisition closes.
Signet's offer values Zale at about $1.4 billion, when including debt, or an enterprise value of 7.4 times the company's trailing 12-month adjusted earnings before interest, taxes, depreciation and amortization.
The deal is expected to boost Signet's earnings by high single-digits in the first full fiscal year after the close of the transaction. That guidance excludes acquisition accounting adjustments and one-time transaction costs.