Investors Vie for a Stake in Zale
February 24, 10
Zale has received several proposals since
hiring Peter J. Solomon to advise it on its
strategic options
Struggling jewelry retailer Zale Corp. has been receiving proposals from several prospective investors, The Wall Street Journal reported Wednesday. Zale hired
The Journal cites unnamed sources that claim a group of investors consisting of former jewelry-industry executives, with the backing of the private-equity firm MidOcean Partners, sent Zale a proposal several months ago to buy its Canadian operations. The investor group includes John Zimmerman, who headed Zale
Zale, which has posted losses for in nearly every quarter over the past 2 years, removed it’s top executive team, including chief executive Neal Goldberg, after it posted further sales losses for the 2009 holiday season. Last month, Zale asked its jewelry suppliers, diamond traders and other vendors to buy back old jewelry for cash. The retailer also canceled much of the advertising it had planned for Valentine's Day as well as Mother's Day in what is apparently a cost-saving measure.
On Monday, the newspaper reported that private-equity firm Apollo Management submitted a proposal to buy a stake in Zale. If approved, Apollo would insert its own management team, headed by former Zale chief executive Robert DiNicola. Apollo also reportedly offered to purchase Zale's Piercing Pagoda, a chain of mall-based kiosks that Apollo views a good strategic fit with its chain of Claire Stores.
Two additional groups have shown interest in Zale. According to the newspaper, private-equity firm Centerbridge Partners LP and Gordon Brothers Group, a Boston-based financial firm with a large liquidation business, have both expressed interest.
The companies might be prohibited from commenting on their proposals because of confidentiality agreements they signed in order to look at Zale's books, the newspaper speculated.