Tudor Heritage Black Bay Bronze

BASEL, Switzerland — Tudor and Breitling, two of Switzerland’s best-known prestige watchmakers, have agreed to exchange movements in what points to closer links between the fiercely independent brands.

Breitling, owned by publicity-shy Theodore Schneider, has been tipped regularly as a takeover target given the steady consolidation of the Swiss watch industry in recent years. Tudor is the sister brand of watchmaking giant Rolex, whose independence is guarded by a foundation that owns the company.

Both could be moving toward a closer relationship. In the biggest surprise of this year’s Baselworld Watch and Jewellery Show, the two said they would be selling each other an unspecified number of movements — the mechanical heart of a watch — for new timepieces.

Tudor will buy Breitling’s B01 movement for modification in its new Black Bay chronograph model. The Black Bay collection marks a key part of the brand’s ambitions this year to grow its business in the U.S.

Breitling will purchase Tudor’s MT5612 movement for its Superocean Heritage II diver’s watch — an updated version of an original model that is marking its 60th anniversary this year. Both styles will go on sale in the coming months, with the Tudor costing from $4,725 and the Breitling starting at $4,075.

Cooperation makes sense at a difficult time for Swiss watchmakers, which have been challenged by a soaring franc and declining foreign demand. But such exchanges are rare outside major groups. Jaeger LeCoultre, the watchmaker owned by Compagnie Financière Richemont, the world’s second-largest luxury goods group, for example sells movements to other group brands, but not to those outside.

The exchange between Tudor and Breitling could have longer-term implications. WWD has learned that Breitling in recent months invited at least one leading watch group to conduct due diligence — a process generally conducted before a sale.

The potential buyer, which has asked to remain anonymous, said it looked at the books, but felt the due diligence might have been used as a valuation exercise by Breitling’s owners. No further talks were held, and no mention was made of the Tudor deal. “It came as a complete surprise. I only discovered it at Baselworld,” said an executive from the company concerned.

Breitling declined to comment on the claimed due diligence or the possibility of an eventual alliance with Tudor. “I only talk about the brand and its products. We don’t comment on rumors,” said Jean-Paul Girardin, Breitling’s vice president and public face.

The company, founded by Leon Breitling in 1884, was bought in 1979 by Ernest Schneider, who died two years ago. His son Theodore, aged 60, took control in the Nineties, and two third-generation family members work there.

Industry experts forecast significant savings through the movement deal, especially as it involves niche products, where manufacturers required a presence, but lacked the volumes to warrant in-house production.

Girardin, a near 25-year Breitling veteran, denied the deal is a reaction to recent tougher market circumstances and said talks had been conducted “over several years,” with time devoted to technical studies and certification requirements.

He described the agreement as “the first step in a partnership” and much more than a one-off solution. “To develop that kind of partnership is long-term,” he added.

Girardin gave no details regarding volumes or the financial implications of the movement deal, calling it “a long-term technological and industrial partnership to share our common resources.”

Tudor declined to comment, in line with standard Rolex policy. However, the company indicated at Baselworld that it expected to spring further surprises this year, probably in June or July.

The supply of watch movements has been a key issue for the Swiss industry for 15 years. Swatch Group dominates the components sector through its ETA subsidiary that supplies most of the leading brands with mechanical movements. In 2013, a court allowed Swatch to begin to decrease the supply of movements to outside brands, setting a date of 2019 for when the company would be permitted to end all sales of components to companies outside its group. Other component suppliers stepped up their production to fill the void and last year the Swiss competition commission allowed ETA to once again increase its supply to outside brands.

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