Aber has acquired a 51 percent controlling interest in luxury jeweler and watch retailer Harry Winston for $85 million. Aber has the option to purchase the remaining 49 percent from Fenway Partners and Ronald Winston on the sixth year anniversary of the transaction.

 

Private investment firm Fenway Partners held a 55 percent interest in Harry Winston since December 2000.

 

Aber, which revealed plans to buy a majority stake in Winston last November, will pay $85 million of which $20 million is in the form of additional working capital.

Aber will initially pay $40 million and fund the remainder over a period of one year. In conjunction with Aber’s investment Harry Winston has arranged a new $60 million credit facility, with a consortium of banks lead by ABN Amro Bank N.V.

 

“The terms of this transaction reflect the value added that Aber can bring to Harry Winston, and the potential of the brand” said Robert Gannicott, CEO of Aber.

 

“Although the acquisition is dilutive to Aber’s earnings in the first year, it is expected to be neutral in year two and accretive thereafter. In contrast to a mining project, with revenues dependent on a depleting resource, a business such as Harry Winston has potentially infinite life and therefore strong residual value.”

 

Based on Harry Winston’s current operations, it is expected that the dilution to Aber’s fiscal 2004-2005 earnings will be approximately $0.05 per share.

 

“This investment in Harry Winston is the next step in realizing our objective of building value in a diamond business that exploits synergies between the two bookends of the diamond pipeline, mining and retailing” said Gannicott after the agreement was signed.

 

“These are the two segments of the industry with the most attractive returns of a scale interesting to a public company. We believe that our strength and knowledge as a diamond producer will enhance Harry Winston’s access to the appropriate polished diamonds to support growth in its business.”

 

“This is a great day in the 70 year history of Harry Winston”, said Ronald Winston, Chairman of Harry Winston Inc. “Aber’s investment in our company and the relationships it brings will allow us to expand into new markets, and introduce new product offerings. It fulfills my father’s dream of creating a company that extends from the mine to the finished jewel.”

 

Aber says it selected a new CEO, but did not disclose his name. Ronald Winston is continuing as Chairman. The appointment of a new CEO, as well as other additions to the management team, will be announced in mid-April.

 

Harry Winston, founded in 1912, is considered the inventor of modern couture jeweler, and is known as “Jeweler to the Stars”. The company is headquartered in New York City, operates six retail salons worldwide, and plans to open new salons in Las Vegas and Taiwan this year.

 

The jeweler also has over 100 points of distribution internationally for its exclusive line of timepieces.