Even as the global luxury goods industry experiences a new wave of consolidation on the back of strong Asian demand for high-end lifestyle brands, Swatch Group, the largest maker of watches by sales, has acquired Harry Winston's jewelry for $750 million. The acquisition also includes assumption of the jeweler's net debt of about $250 million.
Acquisition of the high-end watches-to-necklaces division will give Swatch the muscle to compete in the high-end bracelets, rings and necklaces segment.
"Harry Winston does brilliantly complement the prestige segment of the group," Swatch chairwoman Nayla Hayek said in a statement. "We are proud and happy to welcome Harry Winston to the Swatch Group family-diamonds are still a girl's best friend."
Swatch's chief executive Nick Hayek said Harry Winston has the potential to generate more than 1 billion Swiss francs ($1.10 billion) in sales and 250 million Swiss francs net profit in about 4-5 years. He observed that if watches continue to grow as dynamically as in 2012, 9 billion franc sales are within reach in 2013.
"Now in view of this acquisition, it can of course be even more," he said.
"The Harry Winston brand now has a new home that can provide the skills and support that it deserves to realize its true potential," Harry Winston Diamond Corp's Chairman of the board and Chief Executive Robert A. Gannicott told reporters.
Rothschild advised Harry Winston on the transaction.
Harry Winston will concentrate on its diamond mining business following this deal. The group will focus on becoming one of a handful of pure-play diamond companies at a time when the gems are increasingly scarce and prices are expected to rise.
Over the last decade, Swatch has bought more than a dozen component makers. Its most recent buys being watch case maker Simon & Membrez and a 60 percent stake in case polisher Termiboites in 2012.
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