Junghans, Bedat Get New Owners

Two stars of the watch cosmos—one rising, the other long-established—acquired new owners in November, capping another year of mergers and acquisitions in Europe’s mid- and luxury-priced watch industry. Junghans, the well-known upscale German brand established in 1861, was purchased by EganaGoldpfeil Ltd., a global marketer of fashion accessories. Gucci Group, one of the world’s leading multi-brand luxury goods companies, acquired a controlling interest in Bedat & Co., the Geneva-based Swiss watchmaker whose luxury timepieces have enjoyed solid and growing success in the United States since their introduction in 1997.

Junghans. Junghans was purchased from the Diehl Group for about $39 million ($304 million Hong Kong dollars) by EganaGoldpfeil, (formerly Egana International). The transaction, financed by EganaGoldpfeil’s internal resources, included all shares in Junghans, its debt, and other liabilities and guarantees, says an EganaGoldpfeil spokesman. The Hong Kong-based global marketer designs, manufactures, and distributes branded fashion products, including accessories, leather goods, and timepieces. Acquisition of Junghans, a pioneer in radio-controlled and solar technology for watches and clocks, will help “propel [our] global business growth strategy,” says a company document.

“Junghans is a strategic fit in our roadmap of allying with prominent players to expand our global business presence and sustain our long-term growth prospects,” says Hans-Joerg Seeberger, chairman and chief executive of EganaGoldpfeil.

The deal also provides Junghans with new opportunities to enter world markets. “It is a significant addition to our global brand-name portfolio, [and its acquisition] reflects our strategies of working with market segment leaders and pursuit of world-class technology,” says Seeberger. “On the financial front, we expect Junghans will substantially enlarge the group’s turnover as well as widen our worldwide distribution network.”

EganaGoldpfeil employs about 3,200 people worldwide and is represented in 90 markets. Its turnover in 1999 from watches, jewelry, leather goods, and accessories amounted to about $290 million.

Junghans, which is headquartered in Schramberg in Germany’s Black Forest region, designs, manufactures, and distributes watches and clocks under the Junghans and Eurochron brands. It has a production base in Seebach, Germany, as well as operations in Austria, Switzerland, Italy, the United Kingdom, and Hong Kong.

Last summer, Junghans opened its first U.S. office to promote its radio-controlled and ceramic watches. This year, it will add its solar-powered watches to the U.S. line. Junghans’ timepieces (which retail here for $100 to $1,000) are distributed in the United States to independent jewelers and other fine retailers by Eric Amin Inc., Franklin Lakes, N.J. The firm also distributes the mass-market Casio brand and the German Hanhart luxury chronometer line. According to Amin, the change in Junghans’ ownership will give the company “greater support and more clout to penetrate the U.S. market.”

Bedat. In December 2000, Gucci Group signed a definitive agreement to acquire control of Bedat & Co. The financial particulars were not disclosed; however, under terms of the deal, Gucci Group acquired 85% of the Bedat business. Simone Bedat (who was also a founder of the Raymond Weil brand) is chairman, and her son Christian continues in his role as chief executive. The two founded Bedat & Co. in 1996, based on their years of experience in high-end Swiss watches.

Basic Bedat models start in the $4,000-$5,000 range. More exclusive pieces are priced as high as $30,000, and distribution is limited.

Sales of the Bedat group are expected to be around 20 million Swiss francs for 2000. With the support of Gucci Group, the major markets of Japan, Europe, and the rest of Asia will be targeted in the next few years, and the brand’s selective U.S. presence will be expanded.

Domenico De Sole, president and CEO of Gucci Group, called the new partnership with Christian and Simone Bedat “a wonderful opportunity for Gucci Group. They have created a very vibrant young brand in the luxury timepiece arena, and the prospects for developing this brand worldwide in partnership with Gucci Group are excellent.

“The Bedat business increases our presence in luxury timepieces and extends the scope and positioning of our timepieces portfolio [which already includes the luxury fashion timepieces of Gucci, Yves Saint Laurent, and Boucheron]. Moreover, the entrepreneurial flair and depth of expertise of the Bedat team is highly valuable for our group.”

The enthusiasm is mutual: “From our first meeting with Gucci Group,” says Mme. Bedat, “we knew immediately that they would be the ideal partner for us. [We have] a shared spirit. There could be no better way to build on the work that we have done.” Christian Bedat adds, “Our decision to join forces with the Gucci Group was based heavily upon the character and dynamism of the people in the Gucci organization—pure and simple.”