By  on June 10, 2008

PARIS — Is the watch industry entering another consolidation period?After the acquisition in April of fast-growing Hublot by LVMH Moët Hennessy Louis Vuitton and PPR's announcement Monday of its strategic alliance with Sowind, the Swiss company that owns Girard-Perregaux and JeanRichard, industry observers are wondering which high-end Swiss watch brand could be the next target. After all, LVMH chief Bernard Arnault has made no secret of his interest in buying more watch brands, saying his group needs to bolster its presence in the sector. "There may be a few acquisitions in the watch business," Arnault said at a shareholders' meeting last month. "We're not number one [in watches] yet."Though there are several covetable independent high-end Swiss brands that remain unallied with one of the main groups — LVMH, Compagnie Financière Richemont, Swatch Group or PPR — industry watchers wonder if any remaining top brands are actually for sale."Very few brands want to sell," said Michel Dyens, who advised LVMH on the acquisition of Hublot. "It's a matter of horizon. But I wouldn't expect any deals in the watch sector very soon."There are plenty of covetable targets. Independent, family-owned brands like Corum, Chopard, Ulysse Nardin, Patek Philippe and Audemars Piguet would be jewels to add to any luxury group's crown."Any of the companies that have profitable sales over $150 million [are targets]," admitted Severin Wunderman, the owner of Corum. "We are only very few independents left."Wunderman, however, isn't really interested in selling. "If I got a crazy offer [I might consider it]," he said. "But under normal circumstances, no."Sources said Audemars Piguet, which recently unveiled a watch with Chanel, isn't interested in selling either. Instead, the company is busy integrating all of its production in order to be able to operate more seamlessly in a landscape becoming dominated by luxury conglomerates. Audemars, still owned by members of the family that founded the manufacturer in 1875, is also building a new production facility that will help increase production and ensure its financial autonomy.Patek Philippe, which is owned by Switzerland's Stern family, is another unlikely target, with family members repeating often the company isn't for sale.That would leave Ulysse Nardin, which is owned by Swiss entrepreneur Rolf Schnyder; Chopard, which is owned by Switzerland's Scheufele family, and Franck Muller, owned by Vartan Sirmakes and Muller — companies that aren't interested in selling either, according to sources.That hasn't stopped speculation, however. To wit, rumors have been circulating that Breitling, owned by Switzerland's Schnieder family, has a potential suitor in American financier Warren Buffett, who is said to have met with the family during his recent trip to Europe looking for investment opportunities.Breitling and Buffett did not respond to requests for comment.Other attractive targets are scarce, insiders said. Niche brands like FP Journe and Richard Mille could be attractive, even if their businesses remain somewhat small. Mille said several suitors have approached him but that he is not interested in selling.It's been almost a decade since the last wave of consolidation washed over the industry, when LVMH bought Tag Heuer, Zenith and Ebel, and Richemont won a fevered bidding battle to acquire Jaeger-LeCoultre, I.W.C. and A. Lange & Söhne. It was around the same time that Gucci Group bought Bedat & Co. and Swatch acquired Breguet and Jaquet Droz.

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