Cortina plans to acquire Sincere Watch for S$84.5m
Singapore
MAINBOARD-LISTED luxury watch retailer Cortina Holdings has proposed to acquire privately-held Sincere Watch for S$84.5 million in cash, as it looks to expand its footprint in the region.
In an exchange filing early Tuesday morning, Cortina said the proposed acquisition will give it access to Sincere Watch's arsenal of brands that can be distributed across 40 combined outlets and create operational synergies.
Cortina, which was founded by its chairman and CEO, Anthony Lim, in 1972, also believes the proposed acquisition would provide it with exclusive distributorship rights to the Franck Muller brand in 12 countries within the Asia-Pacific, but did not specify the countries.
The purchase price of S$84.5 million represents a discount of about 0.2 per cent from the target group's net tangible assets as at June 30, 2020. Cortina intends to raise around 60 per cent of the sum from bank borrowings and the remainder through internal resources.
As at Sept 30 2020, the Cortina group had S$279.3 million in current assets, including S$122.3 million in cash and bank balances. It had current liabilities of S$74.9 million.
Cortina recorded a net profit of S$39.3 million for its financial year ended March 2020. According to Tuesday's filing, Sincere Watch incurred a net loss of S$6.4 million for its FY2020.
Sincere Watch recorded S$160.1 million in revenue for its financial year ended March 2020, a 12.4 per cent decline from a year ago, based on Acra records. Cortina, on the other hand, saw revenue climb 11 per cent to S$513.8 million in the same period, according to exchange filings.
According to Cortina's website, it has 23 boutiques in countries such as Singapore, Malaysia, Thailand and Hong Kong. These include multi-brand boutiques, and specialist boutiques in brands such as Rolex and Patek Philippe.
Cortina said the target group to be acquired - including Sincere Watch's several subsidiaries and an associated company - operates 18 boutiques, with a portfolio including Omega, Audemars Piguet, Panerai and Tudor.
Sincere Watch runs multi-brand retail under the Sincere brand in Singapore and Malaysia, and under the Pendulum brand in Thailand. In addition, it runs mono-brand boutiques for Franck Muller in Singapore and Australia, A. Lange & Söhne in Malaysia, as well as A. Lange & Söhne, Breitling and IWC in Thailand. The proposed acquisition, if completed, would mark the fourth change of ownership for Sincere Watch since it was founded in 1954.
It was first sold by Tay Liam Wee, son of Sincere's founder, in 2007 to now-defunct Hong Kong fashion and luxury watch retailer Peace Mark Holdings at S$530 million. Two years later, a consortium including Mr Tay bought back the watch retailer at S$112.7 million.
The company was subsequently sold to Hong Kong businesswoman Pollyanna Chu in 2012 for S$232 million, and her son, Kingston Chu was appointed as managing director in the same year.
Sincere Watch owns a 5.39 per cent stake in Hong Kong-listed Sincere Watch (Hong Kong), which is the sole distributor of Franck Muller watches and accessories in Hong Kong, Macau, Taiwan and mainland China, according to the Hong Kong firm's 2020 annual report.
Cortina said in the filing on Tuesday that completion of the proposed acquisition is also conditional upon Sincere Watch completing the disposal of its entire legal and beneficial interests in Sincere Watch (Hong Kong) to an entity wholly-owned by Mrs Chu. The proposed acquisition constitutes a major transaction under listing rules, thus requiring Cortina's shareholders' approval.
Cortina said it has received irrevocable undertakings from shareholders representing more than 50 per cent of the voting rights to vote in favour of the deal.
Cortina shares rose eight Singapore cents or 3.9 per cent on Tuesday to close at S$2.15.
READ MORE: Cortina's Sincere plan a timely move to dial into China's market
