Zale's board of directors made the decision to end discussions, deciding its shareholders would be better served by Zale remaining an independent company. Acting chief executive officer Betsy Burton said: 'We are putting the pieces in place to regain share and improve profitability, having developed a sound back-to-basics plan for accomplishing its key strategic objectives.'
Yesterday, Signet confirmed reports in the weekend press that it had held preliminary discussions with Zale regarding a merger.
Seymour Pierce analyst Richard Ratner said: 'We can only suspect that it must have become clear that for Signet to have agreed a merger, given its current trading performance in the US over the past decade, its shareholders would have to have had an obvious advantage from any deal. Presumably this was not acceptable to Zale's board.'
Signet was approached by Zale and its adviser Goldman Sachs, leading to secret talks during the past few months about a possible£2.3 billion tie-up.
Signet's US operations, which account for 70 per cent of its business, are led by top-selling brand Kay. Kay recently knocked Zales the Diamond Store off the top of the US sales league.