TIG Advisors a stockholder of Zale Corporation 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 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.
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