Key Takeaways:
Watches of Switzerland Group shares surged as much as 8.2% to 778.5 pence Monday after Reuters reported the luxury watch retailer held talks with potential acquirers, extending gains Tuesday when the company posted a profit that topped analyst estimates.
"The board believes the market is not fully reflecting the company's earnings power and U.S. growth trajectory," a person familiar with the matter said, adding that Chief Executive Officer Brian Duffy engaged with initial approaches because he viewed the stock as undervalued.
The FTSE 250 company reported adjusted operating profit of 155 million pounds ($207 million) for the year ended May 3, 2026, above company-compiled analyst consensus of 148.4 million pounds. Revenue was supported by strong demand from wealthy U.S. shoppers amid a stock market boom, while the company also cited encouraging signs of improvement in the British market. Shares have rallied 138% from their 2025 low but remain less than half their 2022 peak, LSEG data shows.
A take-private deal would continue this year's migration of UK companies from the London Stock Exchange after a flurry of foreign takeovers. One source said the company was seeking an offer of significantly more than 7.50 pounds per share, while another noted that no formal bid has been made. Private equity funds and strategic bidders have shown interest, the sources said.
Takeover Interest Builds as Stock Lags Peers
The London-listed watch retailer, which splits sales roughly evenly between the UK and the U.S., has drawn interest from suitors attracted by its Rolex and Cartier distribution network. Its shares sank in 2023 after major supplier Rolex acquired Swiss-based retailer Bucherer, a move some analysts viewed as a threat to Watches of Switzerland's relationship with the watchmaker. The stock has since recovered but still trades at a discount to European luxury peers including Richemont and LVMH, making it an attractive target for acquirers.
Earnings Beat Highlights U.S. Strength
The company's upbeat outlook in May was supported by U.S. stock market strength, though higher gold prices have squeezed margins on gold-cased timepieces. The UK's largest luxury watch retailer, established in 2007, operates showrooms across Britain and the U.S. selling brands including Rolex, TAG Heuer, Audemars Piguet and Cartier.
Watches of Switzerland declined to comment on the takeover speculation, and Rolex also declined to comment. The stock closed Tuesday at 777 pence, giving the company a market capitalization of about 1.9 billion pounds. A deal at above 7.50 pounds per share would value the company at more than 2 billion pounds.
This article is for informational purposes only and does not constitute investment advice.
