Signet Jewelers Ltd. (NYSE: SIG) will buy Zale Corp. (NYSE: ZLC) for $690 million.

Zale, headquartered in Irving, Texas, owns and operates Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda retail stores.

The purchase price works out to $21 per share in cash. Before the deal was announced, Zale's shares closed a $14.94. Signet will finance the deal through bank debt, other debt financing and the securitization of a portion of its accounts receivable portfolio.

Signet expects the deal to diversify its business and extend its international footprint. The Hamilton, Bermuda-based company operates about 1,900 jewelry retail locations in the U.S. and U.K., primarily under the brands Kay Jewelers and Jared the Galleria of Jewelry.

The transaction comes after Zale finally returned to profitability, after several years of distress. In fiscal 2013, the company achieved $10 million in net earnings or $0.24 per diluted share, representing the highest net earnings for Zale since fiscal 2007. Before that, Zale had suffered, during a time when the U.S. jewelry industry was considered one of the worst hit in the recession. In 2009, the company closed 118 underperforming stores. Jewelers Finlay Enterprises Inc. and department store jewelry chain Bailey Banks & Biddle, which Zale sold to Finlay in 2007 for $200 million, ended up in bankruptcy protection.

This isn't the first time Signet has pursued Zale. In 2006, the company — doing business as Signet Group plc — approached Zale regarding a possible acquisition, prompting the jewelry retailer to hire Goldman Sachs Group to explore a sale. However, Zale terminated the talks after a few months.  

J.P. Morgan Securities LLC acted as Signet's financial adviser, while J.P. Morgan Chase Bank NA will provide bridge financial for the deal. Weil Gotshal & Manges LLP provided legal advice to Signet. Bank of America Merrill Lynch was Zale's financial adviser, while Cravath Swaine & Moore LLP acted as legal counsel.