Aber Diamond Corp. paid $157 million for the shares of jeweler Harry Winston Inc. it didn't already own, giving the Canadian miner better pricing power in the $70 billion diamond-jewelry market.
Aber previously held about 53 percent of the New York-based jeweler, Aber said today in a statement. The transaction values Harry Winston at approximately $330 million. Toronto-based Aber said it will pay cash.
``This deal allows us to run rough diamond sales and polishing as one fully integrated business,'' Chief Executive Officer Robert Gannicott said in a telephone interview. The integration of the mining and retail side ``means we will be able to improve our rough diamond prices.''
A rally in gem prices, fueled by rising consumption and slowing mine output, has boosted earnings for producers. China alone doubled jewelry purchases since 2001 and may buy 20 percent more this year, according to www Diamond Forecast Ltd., a London-based research firm.
``The market for luxury goods, including diamond jewelry, is one of the fastest-growing segments of the consumer market,'' Harry Winston Chief Executive Officer Thomas O'Neill said in the statement. Rough diamond prices may double in the next five years, Gannicott forecast.
Harry Winston's sales will be $191 million in 2006, compared with $128 million in 2004, Aber said. Consumers bought $70 billion of diamonds worldwide last year, according to James Picton, a diamond analyst at stockbroker W.H. Ireland, based in Manchester, England.
``The past 2 1/2 years have demonstrated the tangible benefits of linking the marketing of rough diamonds to a high- end diamond retailer in the form of improved margins at both ends of the business,'' Gannicott said.
Aber bought 51 percent of Harry Winston in April 2004 for $85 million from Ronald Winston, son of company founder Harry Winston, and Fenway Partners Inc., a New York-based investment firm. The deal included an option allowing Aber to purchase the balance of Harry Winston in 2010, the Canadian company said.
Fenway Partners sold a 30 percent stake, with Ronald Winston selling the remaining 17 percent, to give Aber full ownership, Gannicott said today.
Shares of Aber rose 92 cents, or 2.4 percent, to C$38.95 ($34.77) at the 4 p.m. close of Toronto Stock Exchange trading. They have dropped 9.4 percent this year.
`Jeweler to The Stars'
Jewelry made by Harry Winston, which calls itself the ``jeweler to the stars,'' has been worn by royalty, heads of state and movie stars such as Elizabeth Taylor and Halle Berry, according to is Web site.
The company was founded in 1932 and has retail stores in New York, Beverly Hills, Las Vegas, Geneva, Paris, Tokyo, Osaka and Taipei. Harry Winston opened a five-storey store on London's New Bond Street in July. Its gems are designed, cut and polished on Fifth Avenue in New York, and include the Hope Diamond, on display at the Smithsonian Institution in Washington, D.C.
Aber, a partner in the Diavik mine in Canada's Northwest Territories that is majority-owned by Rio Tinto Group, was advised by Rothschild in London and Washington.
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