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IDEX Online: Swatch buys Harry Winston retail

2013-01-14

Toronto--Harry Winston Diamond Corporation is selling its luxury brand diamond jewelry and timepiece division to the Swatch Group for $750 million plus their assumption of up to $250 million of pro forma net debt.

Harry Winston has been considering the move for some time, especially in light of its recent purchase of BHP Billiton's diamond assets for $500 million. It was understood that the company looked for a way to finance the mine purchase.

When Aber bought Harry Winston Inc., it stated that it wanted stakes in the more profitable parts of the diamond industry, the "bookends."

Knowing that a strong brand name will also improve its share value, Aber changed its name to Harry Winston Diamond Corporation. This equity is now gone. Swatch will retain the Harry Winston brand name and the company formerly known as Aber will change its name to Dominion Diamond Corporation.

Robert Gannicott, chair and CEO of the company, said that when they bought Harry Winston in 2003, there were few investment opportunities in diamond mining and that the Harry Winston was "competitively priced."

"Today there is a range of diamond resource opportunities while the value of heritage luxury brands has increased dramatically," he said in a release.

They bought the retailer in two stages for a total of $242 million. After repayment of debt this transaction will net the company $750 million. "This transaction represents a sound return on our original investment," Gannicott said about tripling their return.

The two companies will also explore the opportunities for a joint diamond-polishing venture bringing together the manufacturing and diamond expertise of the two companies.

"We are proud and happy to welcome Harry Winston to the Swatch Group family -- diamonds are still a girl's best friend," said Nayla Hayek, chairwoman of The Swatch Group.

The transaction is subject to receipt of a variety of regulatory approvals and other customary closing conditions.

This article was first published on IDEX Online on Jan. 14.