By Marta Falconi
ZURICH--Swatch Group (UHR.VX) said Monday it had agreed to buy
U.S. watch-and-accessory company HW Holdings Inc., owner of the
Harry Winston brand, for $1 billion, in an acquisition that
strengthens its presence in the U.S. market and helps it expand
into jewelry.
Biel, Switzerland-based Swatch will buy all of HW Holdings,
which employs 535 people worldwide and operates a production
company in Geneva, for $750 million. It will also assume as much as
$250 million in net debt.
The all-cash deal, which breaks with Swatch's recent practice of
buying parts companies, comes after a partnership between Swatch
and Tiffany & Co. (TIF) fell apart last year.
New York-based Harry Winston, famous for donating the Hope
Diamond to the Smithsonian Institution, makes diamond engagement
rings and pins, as well as high-end wristwatches.
Harry Winston "brilliantly complement(s) the prestige segment of
the group," said Chairwoman Nayla Hayek in a statement.
The deal comes just days after Swatch, best known for its
inexpensive plastic watches, reported record full-year sales of
8.14 billion Swiss francs ($8.9 billion). The company owns a range
of brands, including Breguet and Blancpain, whose watches can
retail for more than $300,000.
Jon Cox, an analyst at Zurich-based Kepler Equities, said the
acquisition makes strategic sense as Swatch tries to boost its
high-end jewelry watches segment, which has enjoyed strong growth
despite a sluggish global economy. Mr. Cox has a buy rating on
Swatch.
The deal doesn't include the mining activities of Toronto-based
Harry Winston Diamond Corp., Harry Winston's ultimate parent. Harry
Winston Diamond Corp. will change its name to Dominion Diamond
Corp. when the transaction is completed. The deal is subject to
regulatory approval.
In early trading, Swatch shares were up 4.4% at CHF514.
Write to marta.falconi@dowjones.com
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