Ratner must deal directly with Signet board to buy UK jewellers

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The Independent Online

Gerald Ratner will have to pitch any offer for Signet's UK jewellery chains straight at the company's board after the two private equity firms stalking the retailer dropped their £2bn bid plans.

KKR and Apax Partners, who put Signet back in play earlier this month, have ruled themselves out of making an offer, leaving Mr Rather to deal directly with the company that forced him out in the early 1990s after he denigrated one of its products as "total crap".

Mr Ratner, who is seeking his high street comeback, had hoped that KKR and Apax would sell him Signet's UK chains, leaving the firms to focus on its bigger US division, which contributes the bulk of its profit. "This focuses the situation on whether Signet will sell to me or not," he said.

Since appointing BDO Stoy Hayward as his financial advisor, Mr Ratner has expanded his plans from merely bidding for H Samuel. He now hopes to raise enough money to bid for Ernest Jones and Leslie Davis as well.

"I have to come up with a premium offer that is credible and properly financed," he said yesterday. "For me, H Samuel is the big prize but I feel I have got a better chance of getting it if I bid for the whole UK business." He believes that by slashing the prices charged by H Samuel he can get the chain making profits of £60m-plus within 18 months. He thinks the chain is loss making.

KKR and Apax left the door open to re-opening talks with Signet, but in a statement said they had "no current intention of approaching the board to make a possible offer for the company". Earlier this year, Signet also held takeover talks with Zales, its main US rival.

Terry Burman, Signet's chief executive, is due to unveil the group's interim results on Wednesday. The company, which is expected to report pre-tax profits of around £57m, is performing much better in the US, where it owns the Jared and Kay chains, than in the UK, where its underlying sales were flat in the last six months, dragged down by poor trading at H Samuel. It has 590 stores in the UK and almost 1,300 in the US.

Since Mr Ratner, who famously said that a Marks & Spencer prawn sandwich would last longer than a gold earring from Ratners, was drummed out of the group, the jewellery market has become much more competitive. Supermarket chains have entered the market, as well as new players such as Warren James, who has around 100 shops.

The former Ratners group changed its name to Signet in 1993 as part of a restructuring plan that saw it switch its focus to the US. After turning his hand briefly to the fitness industry, Mr Ratner returned to the jewellery business three years ago with the launch of an internet site, geraldonline.com.

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