The uncertain economic environment has created opportunities for bigger players in the field of luxury to consolidate further. Swatch Group AG who are the biggest watch maker in Switzerland have decided to acquire Harry Wiston, a watch and jewelry brand from Canada. The deal is reported to be worth $1 billion. Sources in Biel where Swatch Group is based, have said that Swatch will pay $750 million to Toronto based Harry Winston Diamond Corp. who own the Harry Winston brand, and also assume almost $250 million in debt. The Harry Winston Production company in Geneva and more than 500 employees globally will come to Swatch under the deal which is being touted as the largest in the watch industry in recent history.
It is a Strategic Acquisition for Swatch Who Need a Luxury Brand
Nayla Hayek, chairperson of the Swatch Group believes that it is a strategic acquisition that will strengthen Swatch’s portfolio in the prestige and high end segment. It will place them in a better position to be able to compete with luxury watch makers directly. In terms of volume the Swatch Group is the largest watch maker but it is not perceived as the makers of high end luxury watches for which Switzerland is famous. This acquisition will go a long way in changing that perception. It would have taken them very long to develop their own brand and correct that perception. That’s why strategically this acquisition makes a lot of sense for the Swatch Group even at the cost of $1 billion.
The Acquisition Will Come in Force After Regulatory Approvals
The mega deal will become effective after the regulatory approvals. Experts in the industry believe that it is just a formality as both the large corporations had taken professional help in order to conclude the deal according to the regulatory guidelines. With the Harry Winston brand out of their control, Harry Winston Diamond Corp. has decided to change its name to Dominion Diamond Corporation. Robert Gannicott, Chairman of the Harry Winston Diamond Corp. was interacting with the media and commenting on the acquisition deal. Overall it has been a good deal for both the parties. Harry Winston has got itself good valuation and Swatch Group has strengthened its portfolio.