Speculation heats up around Aurum takeover

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Future of watch and jewellery group’s 165 stores hangs in the balance.

With a portfolio that includes Mappin & Webb, Goldsmiths and Watches of Switzerland totalling 165 retail outlets in the UK and a strong set of financial results, Aurum is a potential gold mine for any investor.

As of yet there has been no firm word on a successful suitor, but speculation in the market has sources close to the business placing bets on it being a private equity firm that eventually buys out Landsbanki’s share, with the likelihood of the company selling it on to make a profit.

This year, Aurum announced underlying profits of £16.1 million and like-for-like sales up 16.6%, totalling £326 million. These buoyant figures after years of strife at the business led Aurum non-executive chairman Don McCarthy, who is believed to own 17% of the business, to say: “Aurum has been one of the few success stories on the British high street over recent years. Since the restructuring of the group in 2009, the business has delivered well beyond our expectations in terms of both revenue and profit growth. [Chief executive] Justin Stead and his team have significantly outperformed in the first two years of our investment plan and we have therefore decided to look for a new investor that is able to assist this team in capitalising on the very significant and credible opportunities that are now presenting themselves.”

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One of the rumours circulating the market has been that one of Aurum’s original founders, Jurek Piasecki – owner of watch and jewellery distributor Nuval – is looking to buy back a share in the company. A report by This is Money suggests that Piasecki may be drawing up a plan to regain control and slim down the business after leaving four years ago.

At the time of going to press Piasecki was out of the country and unavailable for comment but Nuval director Richard Darling commented that any plans Piasecki has for Aurum would not affect Nuval. He said: “I know there was some speculation but Jurek’s business is his own and entirely separate from Nuval.”

It is believed that a heated boardroom discussion in 2007 led to the suspension of Piasecki from Aurum, who formally left the company in 2008 after 25 years. Since then, Stead (pictured below) has held position as chairman, but the suggestion that Piasecki may be looking to re-gain control is already leaving a bitter taste.

A report by Retail Week suggests that Piasecki may face resistance from Aurum’s management, who are less than enthusiastic to sell the business to him following the boardroom rift.

However, Cavendish Corporate Finance which is managing the sale of Aurum said that Piasecki has yet to come forward as a potential buyer. Cavendish partner Paul Herman said: “We have not received any approach from Jurek Piasecki. We are not in discussions and nor will we be in discussions with him.”

What the sale will mean for the staff of Aurum and their futures has been reflected upon by Grant Black, founder of jewellery recruitment company Jackson Maine. “I don’t think there will be any big closures for Aurum,” he said. “They have done their best to consolidate as much of the company as possible and are running a very tight ship as it is. If anything is likely to merge it will be head office operations.”

Compared to Signet, the US-based group which owns some of Aurum’s biggest high street rivals in Ernest Jones and H Samuel, Aurum’s figures have been particularly healthy. Its annual growth has superseded Signet’s in terms of sales, with rumours circling that Signet has been struggling in the UK as of late.

The group’s end-of-year figures for the UK showed sales totalling £91.5m across more than 540 stores, and there are plans to close 12 of its H Samuel stores and seven of its Ernest Jones premises. Last year one store of each retailer was closed.

But Signet chief executive Mike Barnes has warded off such hearsay, even that which says Signet might pull entirely out of the UK to focus on the more profitable US stores. “We will continue to make investments [in the UK]. We are moving from certain sites and trialling merchandise… we see an opportunity [in the UK],” said Barnes early last month.

In mid-June, during a conference call with Wall Street analysts, Barnes unveiled a list of priorities for Signet, none of which addressed the UK sale rumours. Nevertheless, if Signet were to sell its UK division, the sale could generate anywhere between £400m and £600m, and again may be an attractive offer for private equity buyers.

 

This article was taken from the July 2011 issue of Professional Jeweller magazine. See the whole edition by clicking here.

 

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