Movado Group Inc. said Monday that it increased its ownership interest in its U.K. subsidiary MGS Distribution from Swico Ltd.
The Paramus, N.J.-based watchmaker grabbed a 90 percent stake in MGS, up from 51 percent. Since 2007, MGS has been operated as a joint venture between Movado and Swico, but the latest transaction terminated the venture between the two companies.
Movado will now manage MGS as a wholly owned subsidiary and Swico will continue to provide logistical support and after-sale service.
In addition, MGS has acquired Movado’s 100 percent ownership interest in MGI Luxury UK Ltd., which will transfer all of its assets and liabilities to MGS in the first quarter of 2014.
Luxury has been responsible for the marketing and distribution of the company’s Movado and Ebel brands in the U.K. and, following the transfer, MGS will assume full responsibility for those functions in addition to its ongoing activities related to the its licensed brands. As a result of the acquisition of Luxury by MGS, in the fourth quarter of fiscal 2013 Movado will incur a one-time U.S. tax charge of approximately $800,000.
“Swico has been a terrific partner for us in the U.K. given their strong sales and distribution infrastructure, which has led to consistent growth in this market for our licensed brands,” said Movado chairman and chief executive officer Efraim Grinberg. “We are excited to take a greater ownership in our U.K. subsidiary and to continue to capitalize on Swico’s capabilities while utilizing our significant global back-office infrastructure to maximize the potential for both our owned and licensed brands in this important market.”