Watches of Switzerland Group has held conversations in recent months about potential bids to take the luxury watch retailer private, three people familiar with the situation told Reuters.
The FTSE 250-listed company, which derives roughly equal sales from the United Kingdom and the United States, has seen its shares jump about 55% so far this year to approximately 7.20 on strong consumer demand for high-end brands such as Rolex and Cartier. Despite that gain, LSEG data show the stock still trades at less than half of its 2022 peak, reflecting a slowdown in European luxury sales over recent years.
Shares of the group fell in 2023 after Rolex, a major supplier, acquired Swiss retailer Bucherer, a move some analysts interpreted as a potential strain on Watches of Switzerlands supplier relationship.
Two of the people close to the matter said CEO Brian Duffy engaged with the initial approaches because he considers the company undervalued by the market. One of those two added that no formal takeover offer has been submitted. A third source said the company is seeking an offer that would be significantly higher than 7.50 per share.
Watches of Switzerland responded to queries by saying it does not comment on rumours or speculation. Rolex did not reply to a request for comment, the people said.
In May, the company provided an upbeat outlook, a view that was supported by strength in U.S. equity markets that helped lift consumer sentiment. The firm also warned that rising gold prices have put pressure on margins.
Corporate context
The retailer, established in 2007 and described as the U.K.s largest luxury watch chain, is scheduled to publish its full-year results on Tuesday. A private sale of the business would add to this years trend of U.K. companies departing the London Stock Exchange amid a series of foreign takeovers.
What remains clear from the sources
- Management has engaged with potential bidders because it believes the market does not fully reflect the company's value.
- No binding offer has been publicly confirmed by any bidder, according to the sources.
- At least one source said the board is seeking a price materially above the current share level of around 7.20.
The available information is limited to the accounts provided by the three people contacted and company statements; there is no public confirmation of a formal takeover proposal at this stage.