Aber Diamond (ABZ-T, ABER-Q) has completed the US$157-million buy-out of its minority partners in famed jeweller Harry Winston, boosting its ownership to 100% from 53%.
Aber is financing the purchase through its existing cash and an extended credit line. Aber’s borrowings now include a term loan of US$100 million, which has a final maturity date of June 2008.
The diamond miner bought its initial 51% stake in Harry Winston in April 2004 for US$85 million. That original deal had included an option allowing Aber to buy the rest of Harry Winston in 2010.
Since Aber’s initial investment, Harry Winston sales have grown from approximately US$128 million for the full twelve months of fiscal year 2004 (including two months that were prior to Aber’s acquisition), to US$191 million for fiscal 2006.
“The past two and half years have demonstrated the tangible benefits of linking the marketing of rough diamonds to a high-end diamond retailer in the form of improved margins at both ends of the business,” said Robert Gannicott, Aber chairman and CEO in a statement.
“We are now able to expand at a pace consistent with the opportunities of the marketplace,” added Thomas O’Neill, Aber’s President and CEO of Harry Winston. “This enables us to open new stores at an aggressive pace, as well as refurbish our existing store network. We plan to strengthen our product development, increase our manufacturing capabilities, and improve management efficiencies across the businesses.”
Aber is enjoying considerable cash flow these days thanks to its 40% ownership in the rich Diavik diamond mine in Canada’s Northwest Territories.
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