CVC Acquisition Of High-End Swiss Watch Brand Breitling 80% Equity

Last November, Switzerland was high-end.

Breitling (Bai Ling Ling) first heard the news of sale, and hired an investment bank GCA Altium Ltd. Ltd. as a consultant. In related reports, the most likely buyers were luxury goods companies, but eventually Breitling still spent private equity funds.

The private equity fund CVC Capital Partners (below CVC) will purchase the Breitling 80% stake through the sixth phase fund, and the specific terms of the paction are not disclosed.

As part of the paction,

Th odore Schneider will continue to invest 20% of the company's shares.

Luca Solca, director of luxury research at Exane BNP Paribas, predicts that the paction value will exceed 800 million euros, about two times the sales volume of the company, which is lower than that of the Swiss watch giant Swatch Group (2.7 times) and Richemont (Paris peak group) (3.8 times).

Breitling sales in 2016 amounted to 4.2 billion Swiss francs, an increase of 13.5% over the same period last year. The overall decline of the Swiss watch industry and the 9.9% year-on-year decline in Swiss watch exports in 2016 were quite prominent.

Richemont, Swatch and index of overall market value / annual sales ratio of luxury stock index

Over the past six months, as the watch industry has been showing signs of recovery, the valuation of the major watch brands has picked up, so this is a very suitable selling opportunity for Breitling.

At the same time, the brand owner Th odore Schneider will continue to hold 20% of the company's shares after the paction, so he still has a say in the management of the company.

With the revival of luxury industry in the second half of 2016, the Swiss watch industry has begun to get out of the doldrums.

In March, exports of Swiss watches rose for the first time in 20 months.

So for CVC, it is also a wise choice to buy a Swiss watch brand at this point in time, especially for companies with huge potential like Breitling.

In the past few years, the sales trend of Bai Ling Ling has been schematic.

Although Breitling has a high reputation and a large number of loyal core customers, Breitling's brand image is somewhat outdated compared with other Swiss watch brands.

In addition, Breitling is one of the smallest Swiss watch brands in the world. Sales in the past few years have not basically increased rapidly, and there is great room for growth in all markets.

Among Asian markets, the potential of Breitling is huge.

They are now selling very little in the Asian market and have not invested too much resources in the region.

With the help of CVC, Breitling can invest a lot in digital channels and marketing and expand its brand customer base, which will greatly boost sales and profitability.

According to a source, CVC will focus on the development of brand in the Chinese market after the acquisition of Breitling.

But the acquisition is not without any risk.

CVC though

Investment in the fashion industry, such as the acquisition of German perfume retailer Douglas, recently joined L'OCCITANE's former executives in bidding for L'OREAL Body's The Body Shop, but the resume in the watch industry is blank, and Breitling's watch is in urgent need of improvement in order to enhance market attractiveness.

But usually private equity funds will only sell the acquired brand again after five years or so, so CVC still has enough time to help Breitling realize its value.

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