Aber to Acquire Harry WinstonAber Diamond Corporation acquires 100% of world-renowned jeweler, Harry Winston
TORONTO, Sept. 13 /CNW/ - ABER DIAMOND CORPORATION (TSX-ABZ,
NASDAQ-ABER), today announced that it has entered into an agreement to
purchase the minority shareholders' interest in world-renowned jeweler, Harry
Winston, for approximately US$157 million giving it full 100% ownership.
The history of the House of Harry Winston dates back nearly 100 years and
includes some of the most famous diamonds in the world, from the legendary
Hope Diamond, now on permanent display at the Harry Winston Pavilion at the
Smithsonian Institution, to the magnificent jewels owned by royalty, movie
stars and heads of state. Harry Winston's dimensional and fluid designs,
flawless craftsmanship and unparalleled quality have set the standards for
diamond jewelry.
Aber purchased an initial 51% stake in Harry Winston in April 2004 for
US$85 million and has since increased its equity interest to approximately
53%. The original purchase agreement included an option allowing Aber to
purchase the balance of Harry Winston in 2010.
"The past two and half years have demonstrated the tangible benefits of
linking the marketing of rough diamonds to a high-end diamond retailer in the
form of improved margins at both ends of the business," said Mr. Robert
Gannicott, Chairman and CEO of Aber. "This acquisition solidifies our position
as the world's premier publicly traded diamond company."
The 100% ownership of Harry Winston strengthens Aber's strategic position
as a diamond company comprising the two most profitable segments of the
diamond pipeline - mining and retailing. This positioning delivers premium
rough diamond pricing through market insight provided by polished diamond
buying. Aber has been able to leverage its role as a supplier of rough
diamonds to secure a more reliable source of the high-quality polished
diamonds required by Harry Winston to support continued growth. Since the
initial investment, Harry Winston sales have grown from approximately
US$128 million for the full twelve months of fiscal year 2004 (including two
months that were prior to Aber's acquisition), to US$191 million for fiscal
year 2006. In addition, management has strengthened margins and improved
operational performance, thereby contributing to Aber's net earnings earlier
than planned.
"The market for luxury goods, including diamond jewelry, is one of the
fastest growing segments of the consumer market," said Thomas O'Neill, Aber's
President and CEO of Harry Winston. "We believe that given the recognition of
the brand relative to the size of the store network, there is an opportunity
for significant growth."
"Harry Winston is performing even better than we originally anticipated,"
commented Robert Gannicott. "The timing and the terms of the deal allow our
shareholders to benefit earlier from the continued growth of Harry Winston."
"We are now able to expand at a pace consistent with the opportunities of
the marketplace," added Thomas O'Neill. "This enables us to open new stores at
an aggressive pace, as well as refurbish our existing store network. We plan
to strengthen our product development, increase our manufacturing
capabilities, and improve management efficiencies across the businesses."
The transaction values Harry Winston, on an equity basis, at
approximately US$330 million. Aber will finance the acquisition through a
combination of cash resources and an increase to Aber's existing credit
facility without impacting the existing dividend policy.
The acquisition and the expanded credit facility are expected to close by
the end of September 2006.
Aber was advised on this transaction by Rothschild in both London and
Washington.