Harry Winston Acquired by Swatch!

[Lovingwarmdiamonds]

I'm not sure where to post this but I'm sure people here will find this as crazy news in the jewelry world.

http://www.deadline.com/2013/01/jeweler-to-the-stars-harry-winston-acquired-by-swatch-for-1b/

 

[babs23r]

Yes, I read that blurb quickly this am somewhere, and couldn't believe it. I don't know what this means. I don't follow HW financial reports.
But certainly fits the saying that everything's obtainable for the right price!

 

[John P]

Swatch is buying Harry Winston's Luxury Goods business. This is intended to position them to compete with Cartier and others on the retail level. It's not the first time Swatch has attempted this; an arrangement with Tiffany & Company from 2007 ended badly in 2011.

This move will return Harry Winston to their mining roots, under the new name "Dominion Diamonds." They acquired the Canadian Ekati mine from BHP Billton last year. The $1B influx from Swatch will absorb debt and add $750M to their capital strength. The logical next-move will be a buy-out of Rio Tinto's share of the Canadian Diavik mine, which they now own jointly.

 

[Matata]

Minor thread jack --- please forgive.

John are you going to JCK PS GTG?

 

[ame]

I don't know how I feel about the closing of HW retail though...so I hope they actually DON'T do that. I would like to hope that while the money holder at the top is changing, the rest of the "retail arm" and craftsmanship arm stays intact as is and doesn't go with this Dominion Diamonds thing.



Another Threadjack--Any STL dates upcoming?

 

[John P]

Minor thread jack --- please forgive.

John are you going to JCK PS GTG?

Hi Matata

I'm planning on it!

 

[John P]

I don't know how I feel about the closing of HW retail though...so I hope they actually DON'T do that. I would like to hope that while the money holder at the top is changing, the rest of the "retail arm" and craftsmanship arm stays intact as is and doesn't go with this Dominion Diamonds thing.

I don't see them closing. I'd be shocked if the Harry Winston brand name doesn't stay with their Luxury Goods arm, and continue to be promoted as HW.

In a big-picture sense the move is practical. Harry Winston's production company is already located in Geneva, where Swatch is based. Swatch can use this move to compete with prestigious luxury watch-makers. Their retail infrastructure can sustain the addition of diamond jewelry and they are active in the Asian market, where there's strong demand for watches, handbags and other high-end items.

With the name change to Dominion it means the current mining operations will become clearly separated from retail products. I think it's safe to say that this simplification will be seen as positive. HW stock rose nearly 8% after the announcement.

Another Threadjack--Any STL dates upcoming?

Are you asking about a "Meet The Cutter" event or a training visit? There's Antwerp business afoot pushing our first MTC activity to the second quarter. I might make a solo visit before that, but it's yet-unscheduled.

 

[canuk-gal]

HI:

Swatch already supplies many of the parts/kits for many (ultra) luxury watch brands. It seems a reasonable "fit"...it is just the name that has the perception of being "cheap".

chewrs--Sharon

 

[Skippy123]

HI:

Swatch already supplies many of the parts/kits for many (ultra) luxury watch brands. It seems a reasonable "fit"...it is just the name that has the perception of being "cheap".

chewrs--Sharon

Interesting, I didn't know that!

Someone was talking about a take over of Tiffanys too today!
http://www.bloomberg.com/news/2013-01-14/tiffany-deal-whispers-buoy-value-after-earnings-real-m-a.html

 

[diamonds-are-friends]

diamonds in casual funky watches anyone?

 

[ame]

I don't know how I feel about the closing of HW retail though...so I hope they actually DON'T do that. I would like to hope that while the money holder at the top is changing, the rest of the "retail arm" and craftsmanship arm stays intact as is and doesn't go with this Dominion Diamonds thing.

I don't see them closing. I'd be shocked if the Harry Winston brand name doesn't stay with their Luxury Goods arm, and continue to be promoted as HW.

In a big-picture sense the move is practical. Harry Winston's production company is already located in Geneva, where Swatch is based. Swatch can use this move to compete with prestigious luxury watch-makers. Their retail infrastructure can sustain the addition of diamond jewelry and they are active in the Asian market, where there's strong demand for watches, handbags and other high-end items.

With the name change to Dominion it means the current mining operations will become clearly separated from retail products. I think it's safe to say that this simplification will be seen as positive. HW stock rose nearly 8% after the announcement.

That is quite a leap. That's pretty positive sounding. I read something on like Canadian Jeweler or something about them closing HW retail stores so that's where I was basing my assessment on the closures. Keeping those stores open would be good, esp with the HW name attached. I mean, I think so anyway.

Another Threadjack--Any STL dates upcoming?

Are you asking about a "Meet The Cutter" event or a training visit? There's Antwerp business afoot pushing our first MTC activity to the second quarter. I might make a solo visit before that, but it's yet-unscheduled.

Either. If you came earlier we could set up a PS GTG at Jim's and totally take over the joint which I am sure he would just love me volunteering his store for haha. Oh, and Dewey's.

 

[Paul-Antwerp]

Adding some historical perspective.

Before 2003, Aber was a Canadian listed diamond-miner owning a 40%-stake in the Diavik-mine (Rio Tinto owning the other 60%).

In 2003, Aber bought Harry Winston for a total of $242 million, with two basic goals in mind:
- Aber stated that they wanted stakes in the more profitable parts of the diamond industry, thus also retail,
- The strong brand name of HW would also improve their share-value.

It was thus no surprise for Aber to rename itself Harry Winston after this acquisition.

In the next weeks, HW (formerly Aber) will finalize the purchase of BHP-Billiton's share (80%) of the Ekati-mine, plus the Canadian sorting-operation and the Belgian sales-operation. Transaction priced at $500 million.

Yesterday, it was announced that Swatch buys the retail-arm of HW for a total of $1 billion, basically the 'old' HW that Aber bought in 2003. With this operation the HW-brand also becomes owned by Swatch. Nice return-on-investment for Aber, by the way.

The remaining listed company thus has become a complete rough-diamond-company again (comparable to the former Aber) and will be renamed to Dominion Diamond Corporation. Speculation is that the extra cash for Dominion, generated by this sale to Swatch, will allow them to potentially take over Rio Tinto's 60% share in the Diavik-mine, turning Dominion into the most important source of Canadian-mined rough diamonds.

Live long,

 

[partgypsy]

My head is spinning! Ah, this post merger world...

 

[John P]

Somewhat related:

Charles Fipke, who owns 10% of Ekati, is trying to prevent BHP Billiton's sale unless the offers are revised. Fipke is a prospector who teamed with BHP in the 1980s.

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=42097

As an aside, Fipke's story is already the subject of a book ("Fire Into Ice" by V Frolick).

Some details: Fipke was a geologist who became fanatical about the possibility of diamonds in Canada in the 1980s. DeBeers was already there, but Fipke suspected glacial activity had moved the indicator minerals they'd found, and they were looking in the wrong places. After a decade of searching, with his backers losing faith, he made the first diamond discoveries in Canada. Overnight, his company shot from <$1/share to $70/share. His main backer, BHP (now BHP Billiton), immediately received 71% of ownership. He sold 19% of his remaining stake to them for $687M. The remaining 10% he still owns, above, could presently be worth more than that... Not a bad payday.

A memorable part of the story is that his marriage unfortunately (?) fell apart as a result of all of his time away in the field. It was the largest divorce settlement in Canadian history at the time. Fipke's quote was memorable, still mentioned in diamond circles. He said “It cost me $200 million. Hey. Best money I ever spent!”

 

[babs23r]

An ex boyfriend used to say,"It's cheaper to keep her"....

 

[John P]

Update: According to HW, Mr. Fipke has dropped his legal action. 'No comment' all around.

http://www.jckonline.com/2013/02/04/challenge-to-harry-winston-ekati-purchase-dropped