The French retail and luxury conglomerate, which owns Italy's Gucci Group, said it has sealed a long-term strategic partnership with Sowind Group, the Swiss holding company that owns luxury timepiece manufacturers Girard-Perregaux and JeanRichard.
Under terms of the agreement, PPR will take a 23 percent stake in Sowind with the possibility of increasing its holding in the future. Luigi Macaluso, chairman and chief executive officer of Sowind, will retain control of the company.
The alignment between PPR and Sowind underscores the attractiveness of high-end Swiss watchmakers to Europe's key luxury players.
LVMH Moët Hennessy Louis Vuitton in April bought control of Hublot, the Swiss company known for the Big Bang timepieces, and LVMH chief Bernard Arnault recently said he was looking for other acquisitions in the sector.
Sales and profits have been booming for Switzerland's luxury watchmakers, thanks to demand in emerging markets from China to Russia. Last year was another record one for Swiss watch companies, with exports growing 16 percent, according to the Swiss Watch Federation.
The partnership between PPR and Sowind will allow the two companies "to combine their know-how and knowledge base in terms of R&D, design, brand management, distribution networks and sourcing," PPR said.
The agreement also allows for Macaluso to join Gucci Group's management committee and for PPR chief executive officer François-Henri Pinault and Robert Polet, ceo of Gucci Group, to sit on Sowind's board.
PPR said the deal would help boost its presence in high horology, which it called "one of the most promising luxury goods markets."
PPR's high-end watch portfolio is one of the weakest among Europe's main luxury players. Its main holding in the sector is Christian Bedat.
Recently, the group's Boucheron jewelry business partnered with Girard-Perregaux to supply high-precision movements for Boucheron watches.
"This is a tremendous opportunity for our brands to be in contact with the greatest watchmaking expertise of Sowind," said Polet.
Sowind, which is based in La Chaux-de-Fonds, Switzerland, employs about 350 people and produced around 20,000 units last year, with prices ranging from 6,000 euros, or $9,300, to 500,000 euros, or $835,000, at current exchange.At the company's shareholders' meeting here on Monday, Pinault called the acquisition "a great opportunity for PPR to enter the world of haute horology." He added that Sowind is one of the few remaining private players and that Gucci Group brands were sure to take advantage of the Swiss company's know-how.
Before the meeting got under way, Pinault offered a short homage to Yves Saint Laurent, who died June 1 in Paris of brain cancer. Pinault said the world of fashion had "lost a genius" and that Saint Laurent had "invented everything" based on his passion for "liberating women."
"He was an immense artist," said Pinault.
Meanwhile, the executive gave little guidance on how PPR is weathering market turbulence at the moment. But he allowed that luxury sales remained strong, even if they were less robust than last year.
"I'm extremely confident," he said, adding emerging markets, especially Asia, were driving growth and offsetting slower activity elsewhere.
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