Apax, KKR abandon Signet Group bid

Apax Partners and Kohlberg Kravis Roberts, two buyout firms, have quashed the possibility of an offer for Signet Group, a jewellery retailer with stores in the UK and US.

Apax Partners and Kohlberg Kravis Roberts, two global private equity firms, have pulled out of running to buy Signet Group, a UK jewellery retailer listed on the London Stock Exchange, private.
The two private equity firms released a statement today saying that they “have no current intention of approaching the board of Signet Group plc to make a possible offer for the company”.
Market sources said that the private equity firms had baulked at the price they would have to pay to secure a deal, thought to be in excess of £2.3 billion (€3.41 billion).
Apax and KKR had previously released a statement confirming that they were jointly undertaking preliminary analysis of the company, which trades in the UK as H Samuel, Ernest Jones and Leslie Davis, with US stores retailing under the brands Kay Jewelers and Jared the Galleria of Jewelry amongst others. Reports at the time indicated that the two firms were mulling a bid of £2.3 billion for Signet.
However, private equity interest aroused concerns from shareholders in Signet Group. Earlier in August, Alistair Mundy, a fund manager at Investec, which owns around two percent of the jeweller, said in a letter to the Financial Times that private equity firms typically buy public companies on the cheap, maximise their value as private companies and then return them to the market.
Mundy added that shareholders should reject any private equity offer at the “rumoured level”, indicating the speculation regarding a bid from Apax and KKR.

Signet: share performance over last twelve months

Signet shares were significantly down following news of Apax and KKR’s abandonment of interest. Shares were trading at 106.5 pence at 10am BST today, down from 115.25 pence at yesterday’s close, giving the group a current market valuation of approximately £1.66 billion.
According to media reports, Baugur Group, an Icelandic investor which led last week’s £351 million acquisition of department store chain House of Fraser, could make a bid for Signet’s H Samuel and Ernest Jones stores.
Gerald Ratner, who lost his Ratners empire which included H Samuel and Ernest Jones in 1991 when he jokingly referred to his company’s products at an Institute of Directors speech as “total crap”, is also reported to have shown an interest in bidding for the group.