Swatch chimes in with $750m jewellery deal
JEWELLER Harry Winston is selling its high-end watches-to-necklaces division to Swatch Group in a $750m (£467.3m) cash deal that expands the Swiss watchmaker’s luxury offering and lets the Canadian group concentrate on its diamond mines.
Yesterday’s s deal reverses a 2004 acquisition which turned Harry Winston, the group that discovered what became Canada’s Diavik diamond mine – now controlled by Rio Tinto – into a miner and jeweller.
The original mining arm is renamed Dominion Diamond Corporation after the sale of the Harry Winston luxury business, which started as a small jeweller in New York in 1932 and rapidly became a favourite with movie stars.
For Swatch, the deal is evidence of the benefits of strong Asian demand for watches, handbags and other high-end items that has given companies the firepower to expand their portfolio.
Harry Winston – which Marilyn Monroe mentioned in her song Diamonds Are A Girl’s Best Friend – has the potential to generate more than SwFr1bn (£674m) in sales and SwFr250m net profit in about four to five years, Swatch boss Nick Hayek said.
Swatch Group is already the world’s biggest watchmaker by sales, with SwFr8.1bn sales in 2012 thanks to brands such as Omega. Buying Harry Winston allows it to enter high-end jewellery, a market dominated by Richemont with its flagship brand Cartier.
“If watches continue to grow as dynamically as in 2012, SwFr9bn sales are within reach in 2013. Now in view of this acquisition, it can of course be even more,” said Hayek.