Swatch Group’s Latest Jewel: Harry Winston

In Industry News, What's New by Jeff PrineLeave a Comment

“Jeweler to the Stars:” Actress Jessica Chastain wears a $1 million plus diamond
Queen by Harry Winston necklace, to a recent screening of “Mama” and the New York Film Critics Circle.

Biel Switzerland, and New York—Swatch Group, the world largest maker of watches, announced today that it has added a major jewel to its crown: Harry Winston Inc. The Swiss-based Group, which owns Omega, Tissot and Swatch brands among others, paid $750 million plus “the assumption of up to $250 million of pro forma net debt” to acquire the “jeweler to the stars.”

“Harry Winston does brilliantly complement the prestige segment of the Group,” said Nayla Hayek, chairwoman of Swatch Group. “We are proud and happy to welcome Harry Winston to the Swatch Group family–diamonds are still a girl’s best friend.”

The deal, which is subject to approval of different regulatory authorities, includes all the Harry Winston “brand and all the activities related to jewelry and watches,” 535 employees worldwide and a production company based in Geneva. Excluded from the deal is the mining arm of Harry Winston Diamond Corp., based in Toronto which will change its name to Dominion Diamond Corp.

Sale Price 23 Times Harry Winston’s EBITDA

Like many luxurygoods companies, Swatch Group has been buying up watch component makers giving its tighter control over the luxury sector’s watch movement production. The Winston purchase comes, too, on the heels of a split in Swatch Group’s partnership with Tiffany & Co. and gives it a stronger position against rival Richemont, which owns Cartier, and LVMH, which bought Bulgari.

“The Harry Winston brand now has a new home that can provide the skills and support that it deserves to realize its true potential,” said Robert Gannicott, chairman/ceo of Harry Winston.

“From a strategic perspective it is positive—Swatch Group has long said it wanted to expand in jewelry,” Kepler Capital Markets analyst Jon Cox said. “Details are sketchy but it might also give it a long-term deal on supply of diamonds, something the company has also looked for.”

According to some analysts, Swatch is paying about 23 times the estimated earnings before interest, tax, depreciation and amortization of Harry Winston, but the price seemed justified in the case of Winston’s earning potential.

“At first glance it does not look cheap, but that is probably more a reflection of the profitability of Harry Winston at this stage, which is in ramp-up stage in terms of expansion,” Cox added.






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