Let´s play a mind game …

This is just a conceptual sketch, since it´s not even a rumor.

I´ve got proven information that Johann Rupert, Chairman of the Board of Directors Compagnie Financière Richemont SA, has legitimated his two operating Co-CEOs Bernard Fornas and Richard Lepeu, (more about the board of directors HERE) who run the daily business, to also think about the structure of the group. That means nothing less then they may buy and sell companies. Johann Rupert is these days taking a sabbatical, so he leaves all power to Bernard Fornas and Richard Lepeu.

This is an interesting constellation for them now. What could they actively do with the “power” they got?

Here is my conceptual sketch:

Since the group is still having a hard time with Baume & Mercier and it´s not the groups core business, they could finally sell Baume & Mercier. To whom I don´t know.

This could also be a preparing step to propitiate the Swiss Competition Commission (COMCO).

Thereafter whom could they buy? What brand would perfectly fit into the portfolio of Richemont?

Audermars Piguet of course!

But I have heard and heard again that the private family owners and one big shareholder of Audemars Piguet (AP) told their employees that the manufactory is not for sale.

So we can ask ourselves: Did they lie? Does it make sense to deny this officially in front of all employees and then still sell the watchmaking pearl? I heard the way the employees were told that AP is not for sale was quite intense. This makes me believe that this is true.

One more thing: To buy AP makes only sense if you also buy Richard Mille. And rumors are around that the Kering Group wants to buy Richard Mille better sooner then later …

So let´s get back to Richemont: Whom could the group buy? There are not so many interesting companies left that would perfectly fit into the portfolio of Richemont.

But there is one deal that would just be perfect for Richemont: Buying the Parmigiani Group with all its stunning manufacturing capacity.

The Sandoz Foundation owns the Parmigiani group. Please quickly click HERE to learn more about the real strength and power of their so-called “The Watchmaking Hub”.

The Sandoz Foundation not necessarily needs its watchmaking pool to be happy. With all the money the foundation has this is just a hobby…

So in case there is a willing to sell the pool it would perfectly fit into the industrial structure of Richemont. Also the brand Parmigiani would perfectly fit into the portfolio. And one other little thing also would make sense: Parmigiani is already exhibiting at the SIHH and not at the Baselworld.

Guys, for Richemont this would be a real boost and dramatically strengthen its manufacturing power.

I see some little problems: Hermès owns 25 % of Vaucher, Chopard 25 % of Atocalpa and the Parmigiani Group is a supplier for a lot of components, including the exclusiveness of being able to sell hairsprings and the entire escapement for a watch and well functioning movements for these brands: As already mentioned Chopard (only components) and Hermès, then we have Patek Philippe (only components), Girard-Perregaux (only components), Bucherer (only components), Moritz Grossmann (only components), TAG Heuer (only components), Zenith (only components), Bulgari, Audemars Piguet (only components), Richard Mille and Corum. Two Richemont brands are also among the ones being supplied: IWC (only components) and A. Lange & Söhne (only components),

Parmigiani!?!?!

I estimate you did not know this… Not bad! What do you think?

The Watchmaking Hub produces essential components and with Vaucher reliable calibers. As already mentioned all this would perfectly fit into Richemont´s world.

So how likely is this to happen? Guys this is hard to answer, since it´s a mind game, a conceptual sketch and not more.

What makes me suspicious is that the two operating CEOs, Fornas and Lepeu, have a clear GO for buying and selling and the Richemont Group in the moment is not growing in the speed it would like to grow. Don´t forget: Cartier needs much more movements, as well Montblanc and Panerai. Just in case Richemont will (must not) not sell Baume & Mercier, this would be the next candidate who desperately needs mechanical movements …

 

So if one of you reading this has something to add he is very welcome to do so 🙂

 

 

 

 

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4 Comments

  1. Thomas says:

    I don’t know if Parmagani is undervalued. I believe Parmagani does not have a clear strategy DKSH had trouble and lost money. Also I believe the name is wrong to me it sounds more like a cheese then a watch name. Ask anyone on the street about Parmagani and you will be surprised what answer you will get! Maybe better they remain supplier of components then creating watches. I like your idea of AP & RM it would make a lot of sense but not sure if the owner of AP are willing to let go. What would happen to Renaud & Papi if Richmond would buy RM? Didn’t you announce at Basel that the Kering Grp is interested in RM??

  2. Alexander Herzog says:

    Alexander, very well thought, makes sense, although for me Parmigiani would fit best because of potential in the Market (imho undervalued)and, as you correctly stated, industial strengh on components side. AP is , I think, too difficult and too longterm to bring it to a growth path. Just one question: I didnt got the link between AP and RM ? regards Alex