Harry Winston Diamond Corp. is exiting the luxury jewellery and watch business to better focus on diamonds in the rough.
Just over eight years after it got into the jewellery sector, Toronto-based Harry Winston Diamond has struck a deal to sell the division to Swiss giant Swatch Group Ltd. for about $750-million (U.S.) cash. Swatch is also assuming as much as $250-million in debt.
The agreement allows Harry Winston Diamond to concentrate on its diamond-mining operations, while Swatch is set to expand its range of high-end products.
Harry Winston Diamond – which will be renamed Dominion Diamond Corp. once the deal closes – was created in its present form in 2006, when Canada’s Aber Diamond Corp. acquired Harry Winston Inc., the 70-year-old legacy of a U.S. jeweller who struck a high profile lending his choice pieces to Hollywood stars and starlets for appearances at the Academy Awards.
Marilyn Monroe name-checked Harry Winston in her famous song “Diamonds are a girl’s best friend.”
Speculation that Harry Winston Diamond’s retail unit would be spun off had swirled ever since it became a miner via the Aber merger.
Last November, it said it was paying $500-million for a controlling stake in Ekati, Canada’s first ever diamond mine, from global miner BHP Billiton Ltd., in a bid to expand further in the upstream diamond sector.
As a mining outfit, Harry Winston Diamond will become one of only a few pure-play diamond companies in the world in a context of reduced supply of the gems and anticipation of rising prices.
“From the point of view of both parties, it’s actually a pretty good deal,” said Jon Cox, head of Swiss research with Kepler Capital Markets in Geneva.
“It’s a match made in heaven.”
Harry Winston Diamond is getting a very good price for the unit and Swatch will fill a gap in the high-end jewellery business after the collapse of its partnership with Tiffany & Co. in 2011, he said.
Harry Winston Diamond “took over a sleeping beauty in terms of the Harry Winston brand and turned it into a meaningful player in the jewellery space. Job well done,” said Mr. Cox.
“But times have changed and Harry Winston lacks the global scale in its jewellery business,” he said.
“Swatch Group is a good home for it.”
Harry Winston Diamond chairman and chief executive officer Robert Gannicott said in a news release Monday: “At the time that we purchased the Harry Winston brand, resource investment opportunities for diamonds were rare and expensive following the euphoria of the Canadian diamond discoveries, and the involvement of the large international mining companies. The Harry Winston brand was competitively priced compared with its peers and we could bring diamond expertise and strategic connections to enhance value. Today there is a range of diamond resource opportunities while the value of heritage luxury brands has increased dramatically. This transaction represents a sound return on our original investment.”
Harry Winston Diamond will retain a relationship with Swatch, one of the world’s largest buyers of polished diamonds, in sourcing polished diamonds for the watch company, Harry Winston Diamond said in the news release.
The two companies also plan to explore the potential for a joint diamond polishing venture.