Zale Corp., the largest specialty retailer of fine jewelry in North America, said today it will buy Piercing Pagoda Inc., a large gold jewelry retailer, for about $192 million in cash. Zale will purchase the outstanding shares of Piercing Pagoda stock at $21.50 per share, a 34% premium over its closing price Thursday. The offer is subject to Zale receiving at least a majority of Piercing Pagoda's 8.92 million outstanding shares.
The deal is aimed at extending Zale's presence beyond its base of conventional mall stores that offer more expensive jewelry. "This acquisition will extend Zale's 'good, better, best' strategy to capture the opening price point customer while still remaining focused on our core competency of mall-based operations," says Zale President and CEO Beryl Raff.
Piercing Pagoda is pleased with the deal, says Richard Penske, chairman and CEO. "Zale Corp. is clearly the leader in the jewelry industry and has a proven track record of growing and expanding its brands. Zale's merchandising and marketing expertise will allow Piercing Pagoda to further maximize its potential in the marketplace."
Piercing Pagoda operates over 940 stores and kiosks in 44 states and Puerto Rico. It primarily sells lower priced 14K and 10K gold chains, charms, bracelets, rings and earrings as well as a selection of silver and diamond jewelry. Zale operates nearly 1,390 retail jewelry stores throughout the U.S., Canada, Puerto Rico and online.
- by Julia M. Duncan