Chow Tai Fook Buys Peace Mark Assets

Chow Tai Fook, the giant Hong Kong retail jewelry group, has taken over hundreds of watch stores and two manufacturing facilities of bankrupt Hong Kong watch maker and retailer Peace Mark (Holding) Ltd.

Chow Tai Fook, privately owned by Hong Kong business tycoon Cheng Yu-tung, acquired Peace Mark’s watch retail network (more than 1,120 stores) in mainland China, Hong Kong, Macau, and Taiwan. It also got two watch movement factories on mainland China and assumed some of Peace Mark’s debt.

At press time, it was unclear how the deal affected the Swiss-made Milus luxury watch brand, owned by Peace Mark, or Peace Mark’s agreement with U.S. watch retailer Tourneau to build a chain of fine-watch stores in China.

Chow Tai Fook didn’t disclose the acquisition price, but reports in the Hong Kong press said the deal cost over $90 million.

Peace Mark has been a major international watchmaker, distributor, and retailer with offices and markets in the United States, Europe, China, and other Asian countries. It had exclusive rights to operate De Beers stores in China and develop the Chinese market for French high-end jewelry brand Boucheron.

In late 2007, Peace Mark acquired watch movement maker STM and bought Sincere Watch, a chain of 150 fine-watch stores in Southeast Asia. Early this year, it got a $500 million bridge loan from international banksto finance that purchase and existing loans. This summer, its stock price on the HongKong Exchange began falling on rumors about its financial situation. In August, the company suspended trading and an English private equity firm withdrew a buyout offer.

In early September, Peace Mark announced it couldn’t meet demands by some banks to repay $156 million. Lenders canceled the bridge loan, making it difficult for Peace Mark to repay existing loans and prompting demands from other creditors. On Sept. 11, two provisional liquidators were appointed and began an urgent assessment of Peace Mark’s financial position and operations in consultation with management, creditors, and other stakeholders.