Strategic Transaction Creates Significant Growth Opportunities
Through Implementation of R2Net’s Innovation Capabilities and Digital
Technology
HAMILTON, Bermuda--(BUSINESS WIRE)--
Signet Jewelers Limited (“Signet”) (NYSE:SIG), the world’s largest
retailer of diamond jewelry, today announced that it has agreed to
acquire R2Net for $328 million in an all cash transaction. R2Net is the
owner of JamesAllen.com, a fast-growing online jewelry retailer, as well
as Segoma Imaging Technologies, who provides R2Net machines to enable
delivery of next-generation digital shopping experience for jewelry.
The acquisition will bring together Signet’s jewelry retail business
with R2Net’s world-class innovation capabilities and digital technology
to create an enhanced customer shopping experience and accelerate
Signet’s execution of its Customer-First OmniChannel strategy while
adding a fast-growing millennial online retail brand to Signet’s
portfolio. The acquisition represents an important step for Signet
towards building scalable digital capabilities for OmniChannel
transformation.
“This is a highly strategic acquisition for Signet. The James Allen
brand and R2Net’s technologies and innovative approach present a unique
opportunity to rapidly enhance our digital capabilities and create a
distinctive customer shopping experience which more seamlessly
integrates our digital and physical retail platforms,” said Virginia C.
Drosos, Chief Executive Officer of Signet. “We look forward to the R2Net
team, who have been long-term partners on our Jared Design-A-Ring
platform, joining the Signet family. Together, we will redefine the
jewelry shopping experience and further accelerate our Customer-First
OmniChannel strategy.”
R2Net was founded in 2006 by Oded Edelman, James Schultz, Michele Sigler
and Dean Lederman. The Company is headquartered in New York City with
global operations, including technology innovation centers in Israel and
24/7 customer service operations in Frederick, Maryland. R2Net’s
innovative technologies include proprietary 360° Diamond Display
Technology, Virtual Ring Sizer and Ring Try-On mobile application.
“We founded JamesAllen.com with a mission to offer beautiful rings,
simplicity, selection, pricing transparency and overall value
to consumers online,” said Mr. Edelman, Co-founder and Chief Executive
Officer of R2Net. “By joining forces with Signet, we believe we will be
able to accelerate the growth of JamesAllen.com
and our adjacent R2Net businesses while continuing to build on our
unique culture and technology. The Signet and R2Net teams have a shared
belief that consumers deserve the best jewelry shopping experience and
we look forward to continuing to build innovative technologies together
to enhance the consumer experience across the Signet brand portfolio. I
am excited to be working with Ms. Drosos and the Signet team to delight
jewelry consumers whether in-store, online, or by phone.”
The transaction is currently expected to close in the third quarter of
fiscal 2018 subject to customary closing conditions and regulatory
approval and will be financed with a term loan provided by JPMorgan
Chase Bank, N.A., which is expected to be repaid in full by the end of
fiscal 2018. Signet sees significant growth and value creation
opportunities from the implementation of R2Net’s technology across its
physical and online retail platforms. Signet anticipates the transaction
to be accretive in the first full year of operations.
Following the acquisition, R2Net brands will largely operate as an
independent division of Signet and its current leadership team will
remain intact. In addition to his role as President of JamesAllen.com,
Mr. Edelman will become Chief Digital Innovation Advisor of Signet,
where he will report directly to Ms. Drosos and assume the
responsibility for driving Signet’s digital innovation strategy. As a
sign of commitment to the long-term vision of Signet and R2Net, Mr.
Edelman and the R2Net founders have agreed, subject to the completion of
the transaction, to invest a portion of their transaction proceeds in
Signet shares.
J.P. Morgan Securities LLC served as financial advisor and Weil, Gotshal
& Manges LLP served as legal counsel to Signet, and Meitar Liquornik
Geva Leshem Tal served as legal counsel to R2Net on this transaction.
****
About Signet Jewelers and Safe Harbor Statement:
Signet Jewelers Limited is the world's largest retailer of diamond
jewelry. Signet operates approximately 3,600 stores primarily under the
name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry,
H.Samuel, Ernest Jones, Peoples and Piercing Pagoda. Further information
on Signet is available at www.signetjewelers.com.
See also www.kay.com,
www.zales.com,
www.jared.com, www.hsamuel.co.uk, www.ernestjones.co.uk,www.peoplesjewellers.com and
www.pagoda.com.
This release contains statements which are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements, based upon management’s beliefs and expectations
as well as on assumptions made by and data currently available to
management, appear in a number of places throughout this document and
include statements regarding, among other things, Signet’s results of
operation, financial condition, liquidity, prospects, growth, strategies
and the industry in which Signet operates. The use of the words
“expects,” “intends,” “anticipates,” “estimates,” “predicts,”
“believes,” “should,” “potential,” “may,” “forecast,” “objective,”
“plan,” or “target,” and other similar expressions are intended to
identify forward-looking statements. These forward-looking statements
are not guarantees of future performance and are subject to a number of
risks and uncertainties, including Signet’s expectations about the
timing of the closing, the costs and benefits of the transaction,
including future financial and operating results, Signet’s plans,
objectives, expectations and intentions, and other statements that are
not historical facts. Among the risks and uncertainties that could cause
actual results to differ from those described in the forward-looking
statements include the occurrence of any event, change or other
circumstance that could give rise to the termination of the merger
agreement, the risk that necessary regulatory approvals may not be
obtained or may be obtained subject to conditions that are not
anticipated, risks that any of the closing conditions to the proposed
transaction may not be satisfied in a timely manner, risks that
financing may not be available on the anticipated terms, general
economic conditions, regulatory changes following the United Kingdom’s
announcement to exit from the European Union, a decline in consumer
spending, the merchandising, pricing and inventory policies followed by
Signet, the reputation of Signet and its brands, the level of
competition in the jewelry sector, the cost and availability of
diamonds, gold and other precious metals, regulations relating to
customer credit, seasonality of Signet’s business, financial market
risks, deterioration in customers’ financial condition, exchange rate
fluctuations, changes in Signet’s credit rating, changes in consumer
attitudes regarding jewelry, management of social, ethical and
environmental risks, security breaches and other disruptions to Signet’s
information technology infrastructure and databases, inadequacy in and
disruptions to internal controls and systems, changes in assumptions
used in making accounting estimates relating to items such as extended
service plans and pensions, risks related to Signet being a Bermuda
corporation, the impact of the acquisition of Zale Corporation on
relationships, including with employees, suppliers, customers and
competitors, and our ability to successfully integrate Zale
Corporation’s operations and to realize synergies from the transaction.
For a discussion of these and other risks and uncertainties which could
cause actual results to differ materially from those expressed in any
forward-looking statement, see the “Risk Factors” section of Signet's
Fiscal 2017 Annual Report on Form 10-K filed with the SEC on March 16,
2017. Signet undertakes no obligation to update or revise any
forward-looking statements to reflect subsequent events or
circumstances, except as required by law.
About R2Net
R2Net (conceived as "Rough Diamonds to Internet"), which owns
JamesAllen.com, operates a robust e-commerce and supply chain platform
that connects the entire span of the diamond industry’s ecosystem,
including manufacturers, retailers and consumers. R2Net owns and
operates four distinct brands: JamesAllen.com, Segoma, D-Market (Diamond
Market) and Brio Animation Studio. R2Net provides highly magnified 360°
HD images of diamonds to diamond polishers, and then displays them on
its D-Market and JamesAllen.com platforms, allowing retailers,
manufacturers and consumers to transact digitally without the high
expenses and time delays associated with traditional brick & mortar
alternatives.
JamesAllen.com, one of the fastest growing online retailers of
engagement rings and loose diamonds, has grown its sales by more than
2.5x in the last two years as consumers have embraced the company’s use
of technology to bring simplicity, selection, pricing transparency and
overall value to the engagement ring shopping process. JamesAllen.com
visitors can shop directly for the exact diamond they want and then
design or customize their own personalized jewelry pieces. Using the
company’s proprietary Diamond Display Technology, consumers can view
each of the site’s 150,000+ conflict-free, fully certified loose
diamonds, as well as hundreds of ring settings, in 360° HD and zoomed up
to 40x. JamesAllen.com operates almost exclusively online, with the
exception of its by-invitation-only showroom in New York City.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170824005546/en/
Source: Signet Jewelers Limited