South Africa: Rupert Firm in Timely Move

Source from:  Business Day (Johannesburg) 18 September 2007 09/19/2007

LUXURY goods maker Richemont said yesterday it planned to acquire Geneva watch company Roger Dubuis' manufacturing capacity for an undisclosed sum. The acquisition, part of its strategy to bolster overall watch component manufacturing, followed executive chairman Johann Rupert saying the company needed to increase capacity to keep up with surging demand for watches as wealthy Chinese and Russians bought luxury goods. Last week, Rupert said the company was "addressing the whole supply question, with plans for further expansion of our watch making capacity. That will take some time to deliver, however." Rupert said that in the five months to August the company had "good growth overall", but the strongest growth during the period was at its specialist watch maker unit. Richemont's agreement with Roger Dubuis would see it acquire the watch maker's component production facility, which manufactures movement kits for Roger Dubuis' Poincon de Geneve watch movements. The luxury goods manufacturer said it would continue to supply the kits to Roger Dubuis under a long-term agreement. Richemont would also distribute Roger Dubuis watches in some key markets, including the U.S. and the Middle East, although the Roger Dubuis brand would remain independent. Stephen Meintjes, an analyst at Imara SP Reid, said the bolt-on acquisition should aid overall production capacity as demand for luxury items, such as watches, grew in Russia and China. The deal would add another brand to the company's watch portfolio, which Richemont could sell in selected markets. Alan Grieve, Richemont director of corporate affairs, said while it involved a small transaction, the extra capacity was part of its larger strategy to increase in-house watch making capacity. As demand for high-end watch movements continued to grow, Richemont aimed to extend production facilities. Grieve said the deal would give the company the flexibility of using the production facilities to supply its other watch brands with movements. The high quality of the components fitted in with its existing brands. Richemont owns brands including Cartier, Van Cleef & Arpels, Jaeger-LeCoultre, Piaget, IWC, Baume & Mercier, Montblanc and Alfred Dunhill. It also holds a 19,2% stake in British American Tobacco. Enditem