Watches of Switzerland is the largest seller of Rolex watches in the UK. But its biggest supplier just bought a direct competitor. Now the company itself could be the one getting bought.
The company's dependence on Rolex, which generates about half of its revenue, has long been a double-edged sword. While the partnership has driven growth, Rolex's recent move into direct retail through the Bucherer purchase has intensified concerns about the future of independent distributors.
Being taken private means a buyer purchases all the shares, and the stock stops trading on the London Stock Exchange. Brian Duffy, the company's chief executive officer, held discussions with the interested suitors.
The news report gave a specific number: according to a person familiar with the discussions, "the company is looking for more than £7.50 per share in any buyout offer." That price acted like a floor for investors.
The stock traded at about £7.54 per share, up 4.8% for the day.
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This reliance on Rolex makes the watchmaker both a crucial partner and a potential risk.
Some investors interpreted Rolex's Bucherer acquisition as a cautionary signal that the watchmaker could begin channeling its inventory away from Watches of Switzerland.
If Rolex starts owning its own stores, it could cut out middlemen like Watches of Switzerland. The company's heavy reliance on a single supplier leaves it vulnerable to shifts in Rolex's retail strategy, and the Bucherer acquisition raised fears that the watchmaker might eventually bypass independent distributors altogether.
The company declined to comment when Bloomberg reached out. Reuters did not name any of the potential buyers in its report.
Watches of Switzerland is scheduled to publish its full-year earnings on the Tuesday following the report. The company also plans to scrap a sales and profit target it set in late 2023. That target was supposed to run through 2028. Abandoning the goal suggests the company sees a different future ahead.
Under UK takeover rules, if market speculation about the private talks keeps building, the potential buyer must publicly state its intentions. That means investors could get clarity soon - or a deal could fall apart.
The earnings report will give a fresh look at the company's financial health, and any buyer who has been in talks may be forced to speak up. The stock now sits just above £7.50 a share, but the company reportedly wants more than that.
The potential buyout comes amid a shifting landscape in luxury watch retail. Rolex's acquisition of Bucherer marked a rare move by the watchmaker into direct ownership of stores, raising concerns among independent sellers. For Watches of Switzerland, being taken private could provide a buffer against market uncertainty and allow strategic flexibility away from public scrutiny. The upcoming earnings report will be closely watched for any signs of pressure from Rolex's evolving strategy.
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