Hengdeli Holdings Ltd., the Chinese retail partner of Swatch Group AG, agreed to buy control of a watch seller in Nanchang, capital of the eastern province of Jiangxi, for 469.5 million yuan ($77.3 million).
The acquisition target, Shenzhen Feierpusi Electronics Co., owns an 88.6 percent stake in Nanchang Hengdeli Co., a retailer of watches, gold, jewelry and eyewear, according to a Hong Kong exchange filing yesterday.
“The acquisition can strengthen and consolidate the retail market of watches of the group in the central areas” of China, Hong Kong-based Hengdeli said. The target’s profit through 11 months this year was 3.17 million yuan, compared with 6,000 yuan for all of 2012 and 8.62 million yuan in 2011, according to the filing.
China’s luxury retailers have been hurt by a government crackdown on extravagant gift-giving and dining, especially in regard to officials and public agencies. Hengdeli said in August that its first-half net income fell to 272.5 million yuan from 562.7 million yuan a year earlier as it was more flexible in offering discounts on high-end brands.
Shenzhen Tongqingwang Trading Co. is the seller of the Nanchang retailer, Hengdeli said. The company has already paid 338.2 million yuan and will pay the balance on completion, when the deal is registered with the government.