Signet and Zale to merge in sector-rattling combination

|About: Signet Jewelers Limited (SIG)|By:, SA News Editor

Signet (SIG) confirms its acquisition of Zale (ZLC) in a transaction valued at close to $1.4B. Large Zale stakeholder Golden Gate Capital is on board with the deal.

The company expects to finance the transaction through bank debt and a securitization of its accounts receivable portfolio.

The merger is expected to be accretive in the first year at a high single-digit percentage.

What to watch: Zale's international business and strong online business strengthen a couple of areas Signet had room to improve. The combined company will also yield some improved pricing power.

Premarket action: ZLC +40.8% to $20.99 and SIG +11.0% to $88.