Cortina's Sincere plan a timely move to dial into China's market

RUMOURS of its courtship has been swirling for months but like any budding romance, both parties played coy until Cortina Holdings' proposed acquisition of Sincere Watch finally surfaced in an exchange filing just past midnight on Monday.

Both companies are multi-brand luxury watch retailers with a long history in the local retail scene and the merger will see them give Singapore's other major luxe timepiece group The Hour Glass a run for its money.

Cortina's current portfolio of 32 brands, for one, looks set to overtake The Hour Glass' current 43.

While the former has traditionally built its business on household luxury brands such as Rolex and Patek Philippe, the merger will allow Cortina to also expand the breadth and diversity of its collection to include Sincere's network of independent brands like the cult Hajime Asaoka from Japan and the avant garde HYT.

In addition, the acquisition will include access to Sincere's exclusive distributorship rights to Franck Muller in 12 countries within the Asia-Pacific.

That potentially stands to open more doors for Cortina - which currently only has one boutique in Hong Kong - to mainland China via Sincere's four Franck Muller shops in Shanghai, Beijing, Tianjin and Shenyang.

The merger could also see both Cortina and Sincere cementing their position in the luxury watch e-commerce space - something which The Hour Glass has yet to do. While the latter maintains a strong digital presence via social media platforms and a website that is regularly updated with original content, The Hour Glass does not offer an online checkout option yet.

Dominating e-commerce

Cortina and Sincere, on the other hand, both have e-commerce components on their sites; with the former even offering models that can only be exclusively purchased online. It's an important space to dominate as luxury retailers are finding out and first-movers stand to have an advantage.

Some market players have also speculated if Rolex and Patek Philippe from Cortina's stable could make a return to Sincere's after both cash cows withdrew sales of their watches from the latter in 2012.

Others have noted the proposed deal of S$84.5 million is a steal as Sincere has exchanged hands for a lot more money on three previous occasions. Its first buyer, the now-defunct Hong Kong fashion and luxury watch retailer Peace Mark Holdings paid S$530 million in 2007; before a consortium that included Tay Liam Wee, the son of Sincere's founder, bought it back at S$112.7 million two years later. Its third and current owner, Hong Kong businesswoman Pollyanna Chu, subsequently purchased it for S$232 million in 2012.

Mrs Chu was incidentally once Hong Kong's richest woman but lost more than half her then-US$12 billion fortune from the crash of Kingston Financial Group shares in 2018. She remains Hong Kong's 45th richest person currently with a net worth of US$1.75 billion according to Forbes; though some are speculating that Sincere's 'fire sale' price tag is a result of her trying to recoup her wealth after getting burnt by the stock market two years ago.

READ MORE: Cortina plans to acquire Sincere Watch for S$84.5m