Hollywood stardust is giving Breitling some financial glitz. The Swiss manufacturer of aviator watches worn by celebrities like Brad Pitt, Charlize Theron and Adam Driver has practically doubled its sales in the four years since CVC bought it. The investment firm is considering putting 20% up for sale. Breitling’s luxury brand sees a valuation of 3 billion Swiss francs (about 2.8 billion euros) feasible.
CEO Georges Kern, backed by CVC, has done a good job. Breitling was barely able to mark the time in 2017 when CVC entered and bought the company in a deal that valued it at 800 million Swiss francs (about 737 million euros). Kern simplified the product range, expanded the retail network, and rejuvenated the manly image to reach women and youth as well. The compensation came in the form of an escalation in sales from 400 million to 700 million Swiss francs, with some 175 million Swiss francs of gross operating margin or ebitda in the last year, according to internal sources in the sector told Breakingviews.
The sale of that stake comes at a good time, given the interest of investors in high-end timers. Chronext, the Swiss luxury watch market, expects to attract 250 million Swiss francs when it goes public in the next few months. Unlike their mass-market counterparts, luxury manufacturers don’t have to worry about competition from smartwatches like Apple Watch or Fitbit. Investment companies, including some luxury enthusiasts like Carlyle and Permira, could seize the opportunity.
Taking this into account, Breitling is likely to be expensive. The post-covid rally has propelled luxury stocks to all-time highs, raising valuations. Assuming a multiple midway between those of the leading companies Moncler and Prada, the Swiss brand would be worth 17 times its EBITDA, with a total price of 3 billion Swiss francs, including debt. That’s almost four times what CVC paid.
Those who are going to buy a minority stake will think that it is a lot, especially since they will not be in control. But Breitling’s sales, which feature Brad Pitt’s face in advertising, are growing at 10% a year, according to industry sources, which could bring revenue to 1 billion Swiss francs in 2025, a date when It could also be ready to go public. The positive cash flow means CVC is under no pressure to sell right now. Breitling suitors may have no choice but to accept such a high valuation.
For more information: Breakingviews.reuters.com. The authors are columnists for Reuters Breakingviews. Opinions are yours. Translation is the responsibility of EL PAÍS
Many Thanks To The following Website For This Valuable Content.
Brad Pitt gives wings to Breitling watches | Business