As always when this type of activity hits the market, the big names in luxury, like LVMH and PPR, figure prominently among potential acquirers. The value of Harry Winston's luxury segment, which includes watches, jewellery and retail salons around the world, is around $766 million, or $9 per share, said RBC Capital Markets analyst Irene Nattel in a note to clients. "But on a transaction basis, we would expect (Harry Winston) to get a premium," she said. "Looking at precedent transactions, the range is relatively wide, but the most relevant appears to be the late 2011 acquisition of Bulgari by LVMH."
LVMH bid 3.7 billion euros ($4.85 billion) for Italy's Bulgari in March 2011, offering a 60 percent premium to the average share price over the month prior to the deal. By applying the same premium, Nattel sees Harry Winston's luxury brand alone worth some $1.2 billion net of debt, or $14 per share. She maintained her "outperform" rating and $19 price target on the stock.
LVMH, the world's biggest luxury group, owns jewellers Fred and Chaumet as well as watchmakers Tag Heuer, Hublot and Zenith and is on the lookout for potential acquisitions.
PPR, which owns jeweller Boucheron and watch brands Girard-Perregaux and JeanRichard, has always said it wanted to make acquisitions in "hard luxury," namely watches and jewellery.
Both PPR and LVMH declined to comment, as did a spokeswoman for Harry Winston.
Harry Winston, which started as a small jeweller in New York in 1924, was made famous by a reference in Marilyn Monroe's song "Diamonds Are a Girl's Best Friend". Every year the firm lends out hundreds of millions of dollars worth of jewels to be worn by actresses on the red carpet at events like the Oscars.
In addition to its luxury retail brand, Harry Winston also owns a 40 percent stake in the Diavik diamond mine in Canada's Northwest Territories. Rio Tinto holds the remaining 60 percent.
data source: reuters.com