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Report: Conflict of interest may endanger Signet-Zale acquisition

Dallas – A previously undisclosed conflict of interest may endanger the proposed $1.4 billion purchase of jewelry retailer Zale Corp. by rival Signet Jewelers. According to the New York Times, Bank of America, which represented Zale in talks with Signet, failed to disclose it had made an unsolicited presentation to Signet in October 2013 where it advised Signet to consider purchasing Zale.

The deal, under which Zale stockholders would receive $21.00 per share in cash, has been unanimously approved by the Zale board of directors. Zale’s investor TIG Advisors LLC has called the deal "grossly unfair," saying the jewelry retailers should be able to get $28.60 a share in cash and stock.  

In a statement on May 15, Zale said there is “significant risk and uncertainty” to its own turnaround plan, which was designed as a stretch plan to challenge management if the chain were it to remain independent.

 

© 2014