Britons Bid $328 Million for Kay Jewelers

Ratners Group PLC, Britain’s largest jewelry chain, today launched a friendly $328.1-million takeover bid for Kay Jewelers Inc., a U.S. company that operates nearly 500 stores in the United States.

The deal will make Ratners the second largest jewelry retailer in the United States after Zales, which is owned by Canada’s Peoples Jewelers Ltd.

The addition of Kay’s 494 stores will increase the number of Ratners’ U.S. outlets to 967, Ratners said.

The British company said its offer has been accepted by Kay’s board members who control 34.6% of the American company’s shares.

Ratners said it was offering stock worth $17 a share for the 12.4 million shares outstanding of Kay’s stock. The bid values the whole of the company, including the cost of assuming Kay’s debt, at $328.1 million, Ratners said.

Specifically, Ratners said it is offering one new Ratners U.S. convertible preference share for every Kay share. The Ratners preference shares will be convertible into three of its ordinary shares in the form of American Depository Receipts.

Ratners effectively sealed the agreement against disruption by a counterbidder by gaining an option to purchase the 34.6% stake outright at $17 a share should another bid arise.

Ratners said it also was given a conditional option to buy 2.49 million new Kay shares at $17 a share in the event of a higher counterbid.

Ratners said it will pay for the takeover partly by selling $228 million of new Ratners shares to existing Ratners shareholders.

The Kay’s stores are located mostly on the East and West Coasts and in Texas.