- Letter from Zale board fails to address
shareholders’ concerns with the merger’s inadequate price and
flawed process
- Board plays down Zale’s improving
prospects and performance
TIG Advisors, LLC (“TIG Advisors” and together with its
affiliates the “TIG Advisors Group” or “we”) a stockholder of Zale
Corporation (NYSE:ZLC) (“Zale” or the “Company”), owning
approximately 9.5% of its outstanding shares of common stock, today
responded to the Zale board’s attempt to justify the proposed
merger with Signet Jewelers Limited (NYSE:SIG)(“Signet”) for $21
per share in cash in an open letter addressed to TIG Advisors.
TIG Advisors continues to be disappointed by the Zale board's
lack of constructive engagement with its shareholders. The board's
open letter to TIG Advisors displayed a baffling and intransigent
defense of the deal valuation and negotiation process. Far from
addressing our and other shareholders’ concerns, the board's letter
serves to underscore our belief that the $21 per share offer is
inadequate, and the process by which it was arrived at was flawed
in a number of important respects.
In its letter, the board continues to talk-down the prospects of
Zale, ignoring its own forecasts and improving performance. Zale's
Q3 earnings results released today point to a strong and vibrant
underlying business, with the Company beating street estimates for
EBIT, EBITDA and EPS. TIG Advisors believes that Zale is in the
mid-stages of a turnaround, with substantial value creation ahead
of it.
Contrary to the board's assertions, TIG Advisors is acting in
the interests of all of our fellow stockholders. We believe the
upside potential and synergies created by the proposed merger with
Signet should be shared equitably with Zale shareholders. As we
have repeatedly maintained, this is the "Right Deal at the Wrong
Price."
The board acknowledges an 18% jump in Signet's share price on
the day the merger with Zale was announced, but disingenuously
attributes this value creation to a decision by Signet to increase
the leverage on its balance sheet. TIG Advisors believes that the
potential balance sheet enhancements by Signet were well
understood, anticipated and largely priced-in by market
participants. In fact, on 1/24/14, Signet issued a statement
acknowledging a meeting with a significant institutional investor
to discuss these items. According to Signet’s statement and the
investor’s securities filings, the investor reviewed various
strategic alternatives with Signet including “leveraging credit
receivables” and “optimizing the capital structure.” We continue to
believe the sustained value accretion in Signet stock since the
announcement of the Zale merger is attributable to the unrecognized
value in Zale and the potential synergies created by the proposed
merger.
Finally, the board continues to defend the participation of
Golden Gate Capital’s representative on the negotiation committee,
claiming no conflict in having a shareholder with a stated
intention to exit its position, negotiating the transaction. On the
day the S-3 registration statement was filed for Golden Gate’s
shares, Zale’s stock closed at $15.75 per share. Faced with selling
their shares in a secondary offering or selling to Signet, Golden
Gate had a strong incentive to favor a sale of the Company now, at
the expense of maximizing shareholder value in the best interests
of all shareholders.
TIG Advisors is substantial stockholder, owning approximately
9.5% of the stock. We intend to vote AGAINST the $21 per share offer for Zale,
and encourage our fellow stockholders to do the same.
We filed proxy materials with the SEC to solicit proxies from
Zale stockholders in opposition to the Signet merger. Support our
efforts by voting on the BLUE proxy card by internet, telephone or
mail AGAINST the approval of
the Merger Agreement and related compensation proposals at the
Special Meeting. Alternatively, you may use management’s white
proxy card to vote AGAINST the
proposals.
Even if you have previously deposited a management white
proxy card in support of the proposals, you can still change your
vote by voting your BLUE proxy AGAINST
the merger.
If you have any questions or require assistance in voting
your proxy, we encourage you to contact Charlie Koons 212-929-5708
or Larry Dennedy 212-929-5239 at MacKenzie Partners.
About TIG Advisors
TIG Advisors, LLC ("TIG") is an SEC registered investment
adviser. Founded in 1980, the firm is engaged in the active
management of alternative investment funds and their underlying
businesses. The company seeks to partner with experienced and
talented portfolio managers that it believes have proven and
repeatable investment processes. The firm strives to provide a
platform for managers to preserve the culture, philosophy, and
research capability that is distinct to their investment
discipline, while also drawing on the institutional infrastructure
of TIG.
CERTAIN INFORMATION CONCERNING PARTICIPANTSTIG Advisors, LLC,
together with the other participants named herein (the “TIG
Advisors Group”) has made a preliminary filing with the Securities
and Exchange Commission (“SEC”) of a preliminary proxy statement
and accompanying BLUE proxy card to be used to solicit votes
against approval of the Agreement and Plan of Merger, dated as of
February 19, 2014, by and among Zale Corporation, a Delaware
corporation (the “Company”), Signet Jewelers Limited, a Bermuda
corporation ("Signet") and Carat Merger Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Signet, at a special
meeting of stockholders of the Company scheduled to be held on May
29, 2014 (the “Special Meeting”).
THE TIG Advisors Group STRONGLY ADVISES ALL STOCKHOLDERS OF THE
COMPANY TO READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. SUCH PROXY MATERIALS
ARE AVAILABLE AT NO CHARGE ON THE SEC’S WEB SITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY
SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT
CHARGE, WHEN AVAILABLE, UPON REQUEST. REQUESTS FOR COPIES SHOULD BE
DIRECTED TO THE PARTICIPANTS’ PROXY SOLICITOR.
The participants in the proxy solicitation are TIG Advisors, LLC
(“TIG Advisors”), TFI Partners, LLC (“TFI Partners”), TIG Arbitrage
Associates Master Fund, L.P. (“TIG Associates”), TIG Arbitrage
Enhanced Master Fund, L.P. (“TIG Enhanced”), Carl Tiedemann and
Michael Tiedemann.
As of the date hereof, TIG Associates directly beneficially
owned 175,142 shares of Common Stock, including 5,600 shares of
Common Stock underlying certain call options exercisable within 60
days hereof. As of the date hereof, TIG Enhanced directly
beneficially owned 467,832 shares of Common Stock, including 15,000
shares of Common Stock underlying certain call options exercisable
within 60 days hereof. TFI Partners, as the general partner of each
of TIG Associates and TIG Enhanced, may be deemed the beneficial
owner of 642,974 shares of Common Stock beneficially owned by TIG
Associates and TIG Enhanced, including 20,600 shares of Common
Stock underlying certain call options exercisable within 60 days
hereof. As of the date hereof, TIG Advisors beneficially owns
4,104,775 shares of Common Stock, consisting of 642,974 shares of
Common Stock beneficially owned directly by TIG Associates and TIG
Enhanced (including 20,600 shares of Common Stock underlying
certain call options exercisable within 60 days hereof), and
3,461,801 shares of Common Stock held in other accounts managed by
TIG Advisors (the “TIG Advisors Accounts”), including 111,200
shares of Common Stock underlying certain call options exercisable
within 60 days hereof. Carl Tiedemann, as the managing member of
each of TIG Advisors and TFI Partners, may be deemed to be the
beneficial owner of the aggregate of 4,104,775 shares of Common
Stock, including 131,800 shares of Common Stock underlying certain
call options exercisable within 60 days hereof, beneficially owned
directly by TIG Associates and TIG Enhanced and held in the TIG
Advisors Accounts. Michael Tiedemann, as the managing member of
each of TIG Advisors and TFI Partners, may be deemed to be the
beneficial owner of the aggregate of 4,104,775 shares of Common
Stock, including 131,800 shares of Common Stock underlying certain
call options exercisable within 60 days hereof, beneficially owned
directly by TIG Associates and TIG Enhanced and held in the TIG
Advisors Accounts.
Investor ContactMacKenzie Partners, Inc.Charlie Koons,
212-929-5708ckoons@mackenziepartners.comorLarry Dennedy,
212-929-5239ldennedy@mackenziepartners.comorMedia
ContactBayfield Strategy, Inc.Riyaz Lalani,
416-907-9365rlalani@bayfieldstrategy.com
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