Aber pins hope on Harry Winston (November 28, 2003)

Aber Diamond (ABZ-T) has struck a preliminary deal to acquire Harry Winston, the prestigious New York-based “jeweller to the stars.”

Details were minimal, other than that the deal would take place in stages.

Founded more than 100 years ago by Harry Winston, the company is now run by a new set of owners that includes his son Ronnie and controlling partner Fenway Partners, a New York private equity firm.

Harry Winston boasts outlets Manhattan, Beverly Hills, Paris, Geneva, Tokyo and Osaka, and the company has gained worldwide fame by owning such priceless gems as the Hope diamond and by equipping starlets with high-priced jewellery on awards nights over the past half century.

The move by Aber is in line with its stated goal of building a vertically integrated diamond company with high-end exposure in the world’s largest diamnond market, the United States.

Aber owns a 40% interest in the newly built Diavik diamond mine in the Northwest Territories and markets its share of diamonds independently of Rio Tinto (RTP-N), the operator and 60% owner of Diavik.

Upscale U.S. jeweller Tiffany & Co. (TIF-N) has so far accounted for 23% of Aber’s first sales, with the balance being sold through the open market in Antwerp, Belgium.

Under a direct off-take agreement, Tiffany, which owns a 14% stake in Aber, will purchase at least US$50 million worth of diamonds annually from Aber over 10 years. The deal with Tiffany accounts for 25% of the value of Aber’s share of the run-of-mine production.

Following the Harry Winston news, Aber’s stock cracked a new all-time high of $49.90 in mid-day trading on Nov.28 before settling at $49.44, up $1.94 on the day.