Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200806/20080613/article_362982.htm
Watch out! It's takeover time
Created: 2008-6-13
Author:Thomas Mulier
SWISS family-owned watchmakers may become takeover targets as Swatch Group AG, the world's biggest watchmaker, and Cie Financiere Richemont SA seek to add to their collections of brands, a Bank Vontobel analyst said.
Ulysse Nardin, Corum and Roger Dubuis are among the closely held companies that investors speculate might interest larger rivals, Rene Weber, the analyst, wrote in a note on Wednesday.
"All the big companies have enough cash," Weber said in an interview yesterday, Bloomberg News reported. "To be a global brand you need distribution and some of these companies just don't have it."
Takeovers in the Swiss watch industry have already become common as surging exports lead to shortages of components. PPR SA, owner of the Gucci luxury-goods brand, agreed this month to purchase a 23-percent stake in Sowind Group, whose timepiece brands include Girard-Perregaux and JeanRichard.
LVMH Moet Hennessy Louis Vuitton SA, the maker of Tag Heuer and Dior watches, acquired Swiss watchmaker Hublot in April.
Swatch Group spokeswoman Beatrice Howald downplayed the speculation. Chief Executive Officer Nicolas Hayek Jr has said there's nothing on the market that could fit into the company's collection of brands, Howald said.
Swatch will study any opportunities that are presented to it, she added.
"We would expect further industry consolidation going forward as large players seek to strengthen their positions, both in terms of brand portfolio and in terms of research and development," Luca Solca, an analyst at Sanford C. Bernstein, wrote in a report published this month.
Shipment cuts
Swatch Group's ETA unit, the world's largest maker of watch components, has been reducing shipments to rivals and may stop such sales after 2010.
That has added to production constraints in the Swiss watch industry, which is struggling to meet orders after having its biggest export growth for 18 years in 2007.
Francesco Trapani, chief executive officer of Bulgari SpA, said in April that the Italian luxury company has invested over the past eight years to build more components for itself.
"Either you organize yourself, or you're going to be squeezed out," he said. "It's going to be tough."
Swatch Group originally aimed to stop selling components to rivals in 2006. Switzerland's competition regulator forced the company to delay that until 2010 after complaints from customers. About 75 percent of mechanical watch movements produced at the time contained parts from ETA.
"I decided to force all these people to make their own watches," Nicolas Hayek Sr, chairman of Swatch Group, said in an interview on April 3. "It was like you're trying to make a car, but you don't even make the motor."
Swach Group CEO Hayek Jr said on April 29 that he finds it "troubling" that competitors don't invest more in production capacity.
Ulysse Nardin, Corum and Roger Dubuis are among the closely held companies that investors speculate might interest larger rivals, Rene Weber, the analyst, wrote in a note on Wednesday.
"All the big companies have enough cash," Weber said in an interview yesterday, Bloomberg News reported. "To be a global brand you need distribution and some of these companies just don't have it."
Takeovers in the Swiss watch industry have already become common as surging exports lead to shortages of components. PPR SA, owner of the Gucci luxury-goods brand, agreed this month to purchase a 23-percent stake in Sowind Group, whose timepiece brands include Girard-Perregaux and JeanRichard.
LVMH Moet Hennessy Louis Vuitton SA, the maker of Tag Heuer and Dior watches, acquired Swiss watchmaker Hublot in April.
Swatch Group spokeswoman Beatrice Howald downplayed the speculation. Chief Executive Officer Nicolas Hayek Jr has said there's nothing on the market that could fit into the company's collection of brands, Howald said.
Swatch will study any opportunities that are presented to it, she added.
"We would expect further industry consolidation going forward as large players seek to strengthen their positions, both in terms of brand portfolio and in terms of research and development," Luca Solca, an analyst at Sanford C. Bernstein, wrote in a report published this month.
Shipment cuts
Swatch Group's ETA unit, the world's largest maker of watch components, has been reducing shipments to rivals and may stop such sales after 2010.
That has added to production constraints in the Swiss watch industry, which is struggling to meet orders after having its biggest export growth for 18 years in 2007.
Francesco Trapani, chief executive officer of Bulgari SpA, said in April that the Italian luxury company has invested over the past eight years to build more components for itself.
"Either you organize yourself, or you're going to be squeezed out," he said. "It's going to be tough."
Swatch Group originally aimed to stop selling components to rivals in 2006. Switzerland's competition regulator forced the company to delay that until 2010 after complaints from customers. About 75 percent of mechanical watch movements produced at the time contained parts from ETA.
"I decided to force all these people to make their own watches," Nicolas Hayek Sr, chairman of Swatch Group, said in an interview on April 3. "It was like you're trying to make a car, but you don't even make the motor."
Swach Group CEO Hayek Jr said on April 29 that he finds it "troubling" that competitors don't invest more in production capacity.
Copyright © 2001-2009 Shanghai Daily Publishing House