Glass Lewis Recommends Zale Shareholders Vote AGAINST Merger with Signet
May 27 2014 - 8:30AM
Business Wire
- Glass Lewis endorses TIG Advisors’ view
that Zale holders better off rejecting proposed merger
- Glass Lewis says Signet “got a deal”
and expresses “considerable doubt” that Zale holders getting full
and fair value
- Glass Lewis calls Zale board process
“mediocre” and “conflicted”
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
announced that Glass, Lewis & Co., LLC (“Glass Lewis”) has
recommended that Zale stockholders vote AGAINST the proposed merger with Signet
Jewelers Limited (NYSE: SIG) (“Signet”) for $21 per share in
cash.
Glass Lewis concluded in its report that:
“In our view, shareholders would be better served rejecting the
transaction in favor of a more robust strategic review and -- in
the absence of a compelling alternative -- the continued pursuit of
Zale's stand-alone operating plan.”
“In direct terms, the buyer got a deal.”
“…we maintain the flaws in the board's pre-execution review
process -- including a myopic exploration of alternative bidders,
the appointment of a Golden Gate Capital representative to the
negotiation committee and relying on the fairness letter of a
conflicted financial adviser – are…significant...”
An Inequitable Distribution of Value
In its report, Glass Lewis strongly agreed with TIG Advisors’
contention that the Signet offer to Zale shareholders undervalues
Zale, noting that:
“… in our opinion, the board asks for shareholders to liquidate
their interests while the Company is mid-recovery, and potentially
undervalued, in exchange for an all-cash value that may not fully
reflect Zale's stand-alone prospects and management's historical
ability to achieve near-target performance relative to internal
projections.”
Glass Lewis found the Zale board’s arguments that the
post-announcement increase in Signet’s share price was due to
factors other than the merger to be “…rather unconvincing.”
A Broken Deal Process
In its report, Glass Lewis offered extensive criticism for the
process pursued by the Zale board prior to announcing the
transaction with Signet finding that:
“…the board made no serious effort to consider or engage even a
targeted group of potential alternative buyers...”
Glass Lewis documented five separate occasions where the Zale
board declined to pursue a broader effort to solicit alternative
bidders. Noting that on each occasion the board “…on facile
bases…all but ushered forward a closed engagement with a single
counterparty.”
Conflicts Abound
Glass Lewis endorsed TIG Advisors’ view that as an investor
seeking an exit, Golden Gate Capital may not have been aligned with
other shareholders, and that its participation on the negotiation
committee represented a potential conflict.
Glass Lewis also shared TIG Advisors’ view that BofA’s role as
financial advisor to Zale was a significant flaw in the merger
process saying:
“…we believe [BofA] is decidedly ill-suited to credibly render
an independent opinion as to the fairness of the proposed
consideration to Zale's unaffiliated shareholders, particularly
given that Signet's final offer rather conspicuously matches the
high-end of the range previously presented as reasonable by [BofA]
to Signet's senior executive team.”
Glass Lewis has provided its independent recommendation to
Zale stockholders to vote AGAINST the
merger and now it is time for Zale stockholders to act.
“We are pleased that Glass Lewis, an independent third-party,
endorsed TIG Advisors’ position that the $21 per share offer to
Zale shareholders is inadequate, and that the M&A process was
flawed and fraught with conflicts,” said Drew Figdor, Portfolio
Manager.
“Contrary to ISS’ half-hearted and ill-conceived support for the
merger, Glass Lewis has delivered an unequivocal recommendation to
reject the deal with Signet. As we have said from the outset, the
proposed merger with Signet represents an inequitable distribution
of value. We call on our fellow stockholders to join us in voting
AGAINST the merger,” continued
Mr. Figdor.
TIG Advisors launched this action to further the interests of
all Zale stockholders. We urge you to
join us in voting 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.
Permission to quote Glass Lewis was neither sought nor
obtained.
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.
Investor ContactDrew Figdor, 212-644-5178Portfolio
ManagerorMacKenzie 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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