Swatch Group Ltd. (UHR.VX), the world’s largest watch manufacturer, today announced the purchase of Dubai Retail Group through its subsidiary Technocorp Holding Ltd. from Dubai Holding LLC, an investment fund owned by the Royal Family of Dubai. Rivoli Investments LLC’s 18% stake was not disclosed by either party, but according to Reuters, analyst Patrik Schwendimann estimates the transaction price to be about 100 million Swiss francs. After the transaction, Swatch Group Ltd. (UHR.VX) Swatch’s shareholding will increase from 40% to 58%, forming a controlling stake.
IvoRivoli Investments LLC is mainly engaged in watch retail business, including products of various brands under Swatch Group Ltd. (UHR.VX). It has a retail network of more than 360 stores in the Middle East and employs more than 1,500 people. Swiss private bank Vontobel analyst Rene Weber estimates that 60% of Rivoli Investments LLC’s sales come from the Swatch Group Ltd. (UHR.VX) Swatch Group brand.
The Middle East is one of the fastest growing markets for Swiss watch exports. In the first ten months of this year, the total value of Swiss watch exports to the UAE increased by 13.3% year-on-year to 771.5 million Swiss francs, making the UAE the tenth largest market for Swiss watch exports.
Exane BNP Paribas BNP Paribas analyst Luca Solca predicts that Swatch Group Ltd. (UHR.VX) will integrate the Middle East retail channel by controlling Rivoli Investments LLC, which will bring faster sales growth and more Good business performance. Rene Weber told Reuters that the addition of Rivoli Investments LLC would only contribute 1% of Swatch Group Ltd.’s (UHR.VX) sales in 2014.
ALuca Solca expects Swatch Group Ltd. (UHR.VX) Swatch’s next integration target will be Hendry Holdings Limited (3389.HK), the largest watch retailer in Greater China. At present, Swatch Group Ltd. (UHR.VX) holds 9% of Hendry (3389.HK) and is the second largest shareholder of the latter. If you count Hendry (3389.HK) chairman Zhang Yu Ping’s 500 million shares of Hendry (3389.HK) secured by Swatch Group Ltd. (UHR.VX) in exchange for $ 100 million in three-year personal loans in 2011, and Swatch Group Ltd. (UHR .VX) Swatch’s actual shareholding is 20.42%. And LVMH Mo? T Hennessy Louis Vuitton SA (LVMH.PA) Moët Hennessy-Louis Vuitton Group also owns 6.4% of Hendry (3389.HK).
In addition, Swatch Group Ltd. (UHR.VX) also holds a 33% stake in Saudi retailer Alzouman General Trading Co. Ltd.