Swatch Says Will Buy Harry Winston for Up to $1 Billionn

Swatch Group, the world's leading watchmaker, said on Monday it would acquire U.S. jeweler and watchmaker Harry Winston for up to $1.0 billion (750 million euros).

The Swiss group, most known for its brightly-colored plastic watches, said it would pay $750 million to acquire the company and thus expand its luxury offerings and take a first step into high-end jewelry.

The deal would also involve a maximum of $250 million to take on Winston's net debt, a statement said.

The transaction, which still needs green lights from regulatory authorities, does not include the mining activities of the Harry Winston Diamond Corporation, Swatch said.

Swatch added that it would take over the Harry Winston brand and all the activities related to its jewelry and watches business, including 535 of its employees worldwide and its production site in Geneva.

Swatch chairwoman Nayla Hayek said the deal made sense since what "Harry Winston does brilliantly complements the prestige segment of the (Swatch) Group."

"Diamonds are still a girl's best friend," she added in the statement, referring to the famous Marilyn Monroe song, which mentions Harry Winston, from the 1953 musical film "Gentlemen Prefer Blondes".

Harry Winston's chief executive Robert Gannicott also hailed the deal.

"The Harry Winston brand now has a new home that can provide the skills and support that it deserves to realize its true potential," he said in the statement.

Following the news, Swatch saw its share price jump 3.09 percent to 507.50 Swiss francs a piece in midday trading on a Swiss market up 0.31 percent.

Analysts too were enthusiastic about the purchase, although they said the price was steep.

"The deal makes strategic sense but looks pricey," Kepler analyst Jon Cox told AFP, pointing out that the purchase price represented 33 times Harry Winston's expected annual result for 2013.

"However, I suspect Swatch Group will be able to bring profitability up toward 20 percent margin, while the joint venture in terms of sourcing diamonds looks interesting," he said, adding that "Overall I think it is positive."

While they seemed to agree Swatch was paying a pretty penny for the jeweler, several analysts stressed that the company based in Biel -- the heart of the Swiss watchmaking industry -- could afford the operation since it has more than 2.0 billion Swiss francs in cash reserves.

"They can clearly afford it... We like the deal very much despite the high price," Vontobel analyst Rene Weber told AFP.

"It fills Swatch's gap in high-end jewelery... and as Harry Winston wants to expand more into watches, Swatch Group is the best solution for this," he said.

While Swatch's low-end plastic watches are perhaps its most recognizable, the Swiss company operates in every price range, from the Flik Flak kid's watches to prestigious timepieces under for instance the Breguet brand which can cost more than one million Swiss francs a piece.

Swatch's new deal with Harry Winston -- one of the world's most prestigious diamond dealers -- comes after it ended a partnership with luxury jeweler Tiffany & Co in September 2011.