Zale Corp., the nation's largest jewelry chain, today said it will pay $310.9 million for Gordon Jewelry Corp., the No. 2 chain with more than 600 stores.
The two chains have five Buffalo-area stores between them, with both operating in the Seneca Mall. Zale also has a store at Eastern Hills Mall, while Gordon is at the McKinley and Thruway malls.
Zale officials said they would not comment on the fate of Gordon stores that compete directly with Zale.
The transaction is expected to have an impact on Gordon stock, which already had been trading at record levels on speculation that the company would be sold. It shot up more than $6 on the news to near the proposed sale price of $36.75 a share.
Gordon, founded as a general store in Houston in 1905, had net profit last year of $6.2 million on sales of $389.6 million.
About two-thirds of Gordon's stores sell contemporary, moderately priced jewelry, almost exclusively in shopping malls. The remainder are traditional, upper-end stores that operate under different names in each market.
Zale, which was taken private more than two years ago, had more than 1,300 stores and $1 billion in annual sales at the time.
Gordon announced April 10 that it was considering options to enhance its stock value, including a possible sale.
In a statement today, Gordon president and chief executive officer Daniel P. Gordon said, "We believe the transaction provides excellent value for our stockholders and are extremely pleased with the result."
Zale, which already owns about 4.2 percent of Gordon's outstanding shares, will make a tender offer for the remainder. Gordon said owners of about 54 percent of its outstanding shares already have agreed to tender their shares.
Zale, based in Irving, Texas, is equally owned by Peoples Jewellers Ltd. of Toronto and Swarovski International Holding AG of Switzerland.