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Binda Buys Geneva Watch

Deal vaults Italian firm to over $650M in sales.

An ad for Breil Milano.

MILAN — Italy’s Binda Group is merging with America’s Geneva Watch Group to create a $650 million-plus timepiece and jewelry firm with ambitions of becoming a key player in the global watch and accessories market.

Binda Group said Thursday it had acquired 100 percent of Kenneth Cole licensee Advance Watch Group Ltd. — known commercially as Geneva Watch Group — from U.S. private equity fund Heritage Partners for an undisclosed sum.

“This acquisition…allows our group to further strengthen its international presence and share competencies with a successful U.S. company,” Binda Group co-chief executive officer Marcello Binda said. The Italian company owns the Breil Milano, Breil Tribe, Wyler Genève and Details brands, and produces under license watches and jewels for D&G, Moschino Cheap & Chic and Ducati, among others.

Geneva Watch Group ceo Jeff Gregg will remain in his post, reporting to Binda Group managing director Gianni Pieraccioni.

Geneva’s brand portfolio includes licenses for Kenneth Cole — which is second only to Guess in the U.S. in terms of share of the fashion watch market — Tommy Bahama, Betsey Johnson, BCBG Max Azria, Ted Baker London, Mexx and Speedo. The firm distributes these brands in 4,000 doors, including department stores Macy’s, Bloomingdale’s and Nordstrom and independent retailers.

Geneva also owns the surf and water sports timepiece label Freestyle, which it sells via 5,300 outlets, including specialist chains and independent retailers, as well as serving major retailing chains like Wal-Mart, Target and Kmart in North America via its mass market Advance business unit.

Geneva ended fiscal 2008 with net revenues of $192 million, selling around 25 million watches.

Gregg described the merger as “complementary,” enabling Geneva to grow outside the U.S., where it currently generates 95 percent of revenues, and Binda, which has budgeted for 5 percent of sales from the U.S. this year, to ramp up its penetration in America.

“We are very excited about the strengths to be gained by working with such an internationally successful company as Binda and the benefits it will bring to our customers and brands,” Gregg said.

The combined group now expects sales in the U.S. in 2008 in excess of $200 million, or 30 percent of total worldwide business. Full-year annualized global sales are slated to hit 456 million euros, or $660 million at current exchange.

The transaction brings to a close Boston-based Heritage Partners protracted efforts to sell Geneva after an aborted auction five years ago. Heritage acquired the company in 1999.

Binda said the investment benefited from the current strength of the euro against the dollar and came without debt.

The deal bolsters significantly Binda’s presence in North America in terms of distribution and market share, which the company hopes will help it to compete with rivals Timex, Fossil and Movado.

It should also facilitate Binda’s efforts to develop Breil Milano into a global lifestyle brand, after diversifying recently into fragrances (2006), eyewear (2007) and leather accessories (2008).

“[The merger is] a leap forward, which enables us to gain key strategic assets for the development and growth of our group in terms of know-how and industrial and commercial strength,” Pieraccioni said.

The merger also provides economies of scale upstream in sourcing and production, with Geneva operating a 1,500-employee-strong manufacturing unit in China for the last 10 years.

In the short term, Binda said the deal would accelerate the growth of Geneva portfolio brands in Europe and the rest of the world — highlighting Kenneth Cole and Freestyle as having international potential — and in turn step up the penetration of its own portfolio of brands in the U.S. and consolidate manufacturing and sourcing efforts.

By 2015, Binda Group aims to be a global player, generating revenues of 1 billion euros, or $1.45 billion.

Binda, which was established in 1906, closed 2007 with consolidated revenues of 297 million euros, or $407 million at average exchange, from the sale of approximately 5 million pieces. The group’s offer ranges from mass market products manufactured in the Far East with retail prices below 75 euros, or $109, to Swiss-made products with average prices at around 1,000 euros, or $1,447, to intricate tourbillon watches retailing up to and beyond 130,000 euros, or $188,100.

The firm operates globally via 50 distributors, serving over 12,000 retail stores worldwide, 24 Breil Milano monobrand boutiques and 23 B-Hip! multibrand units.

Binda Group also distributes the Seiko, Lorus and Paris Hilton watch brands in Italy and the Glam Rock watch label in Italy, the U.S. and Canada.