Citizen and Frederique Constant

Yes, it appears to be clear that Citizen has acquired Frederique Constant and all of the pieces that go with it.

I will have a further update in about 2 hours with more specifics - but for now here is the statement from Citizen's site along with a prepared statement from FC

CITIZEN WATCH CO., LTD. TO ACQUIRE FREDERIQUE CONSTANT GROUP
May 26, 2016 Citizen Watch Co., Ltd.

Citizen Watch Co., Ltd. (Head Office : Tokyo, Japan) announced today that it has entered into an agreement to acquire Frederique Constant Holding SA (Head Office : Genève, Switzerland). Under the mid-term business plan, “Citizen Global Plan 2018”, Citizen is implementing a multi-brand strategy and seeking to complete its brand portfolio by acquiring Swiss brands. This particular acquisition will enable Citizen Watch Co., Ltd. to strengthen its brand portfolio, offering consumers a variety of products ranging from accessible timepieces to Accessible Luxury watches. Frederique Constant Holding SA brings the brands Frederique Constant, Alpina, and DeMonaco to Citizen Watch Co., Ltd.

The present management personnel and staff will continue to hold the same positions after this acquisition.
Comments from Mr. Toshio Tokura, chief executive officer of Citizen Watch Co., Ltd. “We have a great opportunity to expand the sales of Frederique Constant through our current distribution
channels of Citizen branded watches, particularly in Japan and the U.S.” said Toshio Tokura. “With the acquisition of Frederique Constant, the Citizen Watch Group will be able to augment its portfolio of brands and occupy the space in the markets where some of our competitors operate and further
expand the presence of the Citizen brand in the market.” He later added “Citizen will be able to achieve great synergy for sharing technologies and infrastructures in the future.”

Comments from Aletta and Peter Stas, the founders of Frederique Constant Holding SA “As we feel a tremendous commitment to the Frederique Constant Group and its people, we started to explore a
potential collaboration to secure the company beyond ourselves. We have become increasingly impressed by the innovative technologies of the Citizen Group. We see the opportunity of Swiss-Japanese partnership to develop and market Accessible Luxury watches for the 21st century and beyond.”

History of Frederique Constant
Frederique Constant in its current form was established in 1988. The company is involved in all stages of watch production, from initial design to final assembly and quality control. Frederique Constant develops, manufactures, and assembles in-house calibers, offering 19 different versions since 2004. Frederique Constant watches are defined by their high quality, precision in design and manufacturing, and accessible prices. Consequently, their perceived value—which stems from the quality of design, materials, and manufacture—is a key component of their success. Each watch is assembled by hand, employing the latest
equipment and extensive controls, to ensure
maximum quality and durability. The company
pursues innovation to offer creative designs at
exceptional value. The company has been
experiencing growth rate well above the industry
average by following clear mission of making fine
watches available to the largest possible audience
of watch enthusiasts at sensible prices. 

Revisiting the UN Sale a Year Later

I originally wrote this a little over a year ago when the sale of Ulysse Nardin was announced.  Now a year on, and things not quite as rosy as might be wished for, I wanted to look back and see how things have changed (and haven't).

"I look at a hundred deals a day. I pick one."

So now with most of the dust settled and the press releases read, re-read, written and re-written maybe it might be a good time to have a look at the bigger picture.

Now many more revered and respected have held forth, many insisting that they saw the acquisition of Ulysse Nardin coming "a mile away!"  Well, hindsight by its very nature is often 20/20.  So I thought I would call on that all-time humanitarian Gordon Gekko to perhaps view this in a slightly more pragmatic light.


 "He's right, I had to sell. The key to the game is your capital reserves, If you haven't got enough, you can't piss in the tall weeds with the big dogs."

I think in light of all of the speculation, the one question I have not really heard asked is - maybe, just maybe they actually NEEDED to sell?  Ulysse Nardin was a media darling in the age of Schnyder, and by that I mean the age of Rolf Schnyder.  Like every brand re-boot, (and if we are very, very honest with ourselves, this is what it was) a charismatic, iconoclastic visionary is needed.  But that in and of itself is not enough (note Blancpain and Hublot in the "post Biver as Patron" era).  You need something more.  The meeting of Schnyder and Ludwig Oechlsin was perhaps not unlike the meeting of Smith and Wesson… or perhaps more appropriately the meeting of Lorenzo de' Medici and Michelangelo.  Two things happened that took the steam out of UN's engine - Dr. Oechslin opted to pursue a life of the mind and "museum curatorship", and tragically, Rolf Schnyder had a "standing appointment" with his creator.  As it is a privately held company, we can speculate all that we want, but if I am viewing things through "Gekko The Great's" perspective, they needed to sell.  And it is possible that maybe there weren't that many takers, so they took.

And in fact, that perhaps still seems to be the case.  What is interesting in all of this is that with the acquisition of UN, Kering has basically put JEANRICHARD on an ice floe to join it's ancestors in the great beyond.

"It's not bad for a quant, but that's a dog with different fleas."

The other popular thought out there is that there was a bidding war and that somehow Richemont, LVMH and the mighty SWATCH got pipped at the post by Kering.  Survey says……. NAAAAHHHHH!

The Ulysse-Nardin that got sold is not the Ulysse-Nardin that was.  Moreover, it is not on a level with some of the recent blockbuster acquisitions like Harry Winston.  It is a great brand, but it represents a truly niche market.  SWATCH does not want or need a charming brand like UN.  Richemont has a fairly full stable.  LVMH?  Well let's just say that although there is turmoil under heaven, the situation is not exactly excellent.  

Again, with the "leaked" (allegedly) news that Maurice Lacroix was looking for a buyer, and a lack of companies STAMPEDING to buy it, my bet is that UN was probably NOT exactly fought over.

"The most valuable commodity I know of, is information"

But more importantly is what Ulysse-Nardin represents - information and innovation.  With Unlysse-Nardin backing what is said to be up to 1/3 of ochs und junior (Ludwig Oechslin's dream factory), and with Dr. Oechslin said to be retiring from the museum, it is not outside of the realm of possibility that the magic could be returning to UN.  Let's be clear, ochs und junior is most likely never going to be a profit leader, (and if what Beat Weinmann has said, it is not intended to be).  But let's just say it is an inexpensive item to carry on the balance sheet to keep the sorcerer in the court.

And, well, it seems the writing might indeed be on the wall.  Let's hope for watch fans and for UN's profitability that there will be some more Oechslin magic.

"You gonna tell me the difference between this guy and that guy is luck?"

Remember pals and gals, although we always think of Kering as the OWNER of Girard-Perregaux and JEANRICHARD - they are more accurately the majority stake holder with 51%.  So the fact that they have plumped for 100% of Ulysse-Nardin actually gives them a better, unfettered toehold in the luxury watch segment.  And it is not down to luck that they were the eventual buyers.  

Don't get me wrong, UN is going to be a project, but with the experience of working with Girard-Perregaux and completely revamping and "re-birthing" JEANRICHARD, Kering now has some good experience with updating and reviving an existing brand while not "throwing out the brand DNA with the bathwater".

And by putting a pillow over JEANRICHARD's sleeping face and smothering it, Kering has all but ensured more resources can now flow in the the UN budget sheets.

"...bright but not bright enough,  Sherlock, roll the dice and play a little Monopoly… what box would Sir Lawrence land on in Erie, Pennsylvania?"

Those out there convinced that Richard Mille is next on the acquisitions list… maybe, but I don't think so.  Let's just say that there are too many hurdles.  Richard Mille first leaked that the acquisition would happen, and Kering (then PPR) disclosed that although those conversations had happened, it would not move forward until Mille untangled "personal affairs".  That was more than a year ago.  And it is possible that Kering spent most of it's pocket money on UN.

Nobody has bitten on much of anything - although DKSH is keen to "offload" their two brands and who knows, maybe even their share in Bovet.  I could be wrong, but given the general mood out there, the lack of Full Retail Buyers, the number of grey market watches sloshing around the "info-web", and the ever increasing number of calls and emails I am getting from brand reps, brand managers looking for an opportunity, and the brands those managers and reps work for calling and looking for new talent, I don't get the sense that anyone is in a mood to acquire.  BUT, and it's a big BUT - this could also be the moment when changes of ownership will happen.  Things will get so clearly bad that a fire sale might seem like the only solution.  And even though things aren't great out there, maybe some folks in China have been saving their allowance, Christmas and birthday money and are ready to swoop in.

Other pundits have posited Breitling, Chopard among others as being on the potential hit list.  Maybe, but instead of thinking high prestige, it might be time for Kering to think high volume.  Maybe, say, a brand making watches in the Mido price range? 

I could, of course, be wrong - I've been wrong before ; )

Finally, let's remember that although we are all passionate, for many people this is simply business -


It's all about bucks, kid. The rest is conversation.

Ultimately, this is the unknown territory we find ourselves in.  In the great "quartz crisis" it was all about technology and the somewhat stoic belief that to change was unthinkable so it would be better to die.

Thankfully an engineer/consultant was willing to suggest change and in changing rescue the Swiss industry, and a man who as a boy loved his steam machine was willing to roll the dice that there were others out there like him, and more than anyone else saved and helped to reestablish mechanical watch making.

We who write about this stuff are always asking ourselves - who is the next Hayek, the next Biver, the next Macaluso or Stas?  It seems unfair because these guys were (and are) giants.  Those that follow will struggle to step out of those shadows.  But in fairness, those that follow need to do more than just follow.  They need to actually lead.  And when you've been groomed and guided and mentored, it is hard to establish your own point of view.  Moreover, it can be daunting to voice an opinion that might be contradictory.

I would like to leave you with a bit of a "parable" -

Back before longitude was "knowable", it was not uncommon for groups of ships to sail together.  And as you can well imagine, you would not dare make your own changes or alter course without the consent of the Admiral.  As oftentimes the Admiral was on a different ship, communication back and forth would be slow and confused. Moreover, the communication could often be misunderstood in transmission.  

What we are seeing now, for better or worse, is that brand directors, managers and sales reps are not unlike those captains and midshipmen of years gone past.  They see that they are heading for the rocks, but are afraid to voice concern and change course.  Thus not just one ship is lost on the rocks, but several.

Sponsoring sailing teams, appointing DJs as brand ambassadors - these money splurges are not going to save your brand from ignoring the fundamentals of ANY business - be it your kid's lemonade stand or Boeing.  It boils down to a pretty basic idea of supply and demand.  With the exception of Rolex and Patek, nobody else in the watch world seems to have an understanding of:

1.  How many potential customers there REALLY are, and -

2.  How many of those potential customers will REALLY be willing to buy their watch at the price they are asking

Once we get that figured out, on to world peace!

What If? Update Number 7!

And BIG UPS to RESSENCE!  Our "Band of Brothers and Sisters" has grown to 12 with RESSENCE joining forces with Girard-Perregaux, JEANRICHARD, A. Manzoni & Fils, Kobold, Aquadive, ISOfrane, Xetum, Jardur, Gavox, the Oberlin Pen Company and SAVOY!

And for those of you have have missed it ; )

What if?

Dear watch companies,

What if?

What if each one of you could take even $5,000 from your annual budgets and donate it to a common cause?  What if the mighty SWATCH, Richemont, LVMH, ROLEX, Sowind, Audemars Piguet, Patek Phillipe, Ulysse Nardin… what if you all came together with a reasonable contribution with the sole goal of trying to fix an "unfixable" problem?

What if 100 watch companies in the world each contributed $5,000 - or more - to fund rangers to protect elephants and rhinos from poachers?  What if based on that, we could then go to people with even more money?  What if your KINDNESS and willingness to do something that was totally selfless then triggered people like Phil Knight of Nike, or Oprah Winfrey, or Bill Gates - I mean, let's aim high here!  What if that all got so much money - and so much attention, that it would be better financially for a father to become a ranger, rather than to become a poacher?  

And what if that action, created a groundswell in China and Vietnam to help people understand that maybe, just maybe the preservation of a species is more valuable than a dubious aphrodisiac?

So, let's name some names - Biver, Hayek, Hoffmann, Sofisti (THANK YOU!), Stern, Marini, Raffi, Stas and all the rest of you -

Are you really interested in doing something great - or is it just talk and PR?  

What am I asking for?  $5,000 if you have it - for some of you big brands, that is WAY less than you spend on a month of advertising.  And as the saying goes, if you can't afford $5,000, give what you can!

Do you really want to make a mark in the world and not just talk about it?  Here is a chance to do it!

Who is in?

What If? Update Number Four!

And joining our growing group, Xetum have joined forces with Girard-Perregaux, JEANRICHARD, A. Manzoni & Fils, Kobold, Aquadive and ISOfrane to combat the poaching of endangered animals by supporting the rangers sworn to protect them!

Who else is in?

And as a reminder -

What if?

Dear watch companies,

What if?

What if each one of you could take even $5,000 from your annual budgets and donate it to a common cause?  What if the mighty SWATCH, Richemont, LVMH, ROLEX, Sowind, Audemars Piguet, Patek Phillipe, Ulysse Nardin… what if you all came together with a reasonable contribution with the sole goal of trying to fix an "unfixable" problem?

What if 100 watch companies in the world each contributed $5,000 - or more - to fund rangers to protect elephants and rhinos from poachers?  What if based on that, we could then go to people with even more money?  What if your KINDNESS and willingness to do something that was totally selfless then triggered people like Phil Knight of Nike, or Oprah Winfrey, or Bill Gates - I mean, let's aim high here!  What if that all got so much money - and so much attention, that it would be better financially for a father to become a ranger, rather than to become a poacher?  

And what if that action, created a groundswell in China and Vietnam to help people understand that maybe, just maybe the preservation of a species is more valuable than a dubious aphrodisiac?

So, let's name some names - Biver, Hayek, Hoffmann, Sofisti (THANK YOU!), Stern, Marini, Raffi, Stas and all the rest of you -

Are you really interested in doing something great - or is it just talk and PR?  

What am I asking for?  $5,000 - that is WAY less than you spend on a month of advertising.  

Do you really want to make a mark in the world and not just talk about it?  Here is a chance to do it!

Who is in?

What if?

Dear watch companies,

What if?

What if each one of you could take even $5,000 from your annual budgets and donate it to a common cause?  What if the mighty SWATCH, Richemont, LVMH, ROLEX, Sowind, Audemars Piguet, Patek Phillipe, Ulysse Nardin… what if you all came together with a reasonable contribution with the sole goal of trying to fix an "unfixable" problem?

What if 100 watch companies in the world each contributed $5,000 - or more - to fund rangers to protect elephants and rhinos from poachers?  What if based on that, we could then go to people with even more money?  What if your KINDNESS and willingness to do something that was totally selfless then triggered people like Phil Knight of Nike, or Oprah Winfrey, or Bill Gates - I mean, let's aim high here!  What if that all got so much money - and so much attention, that it would be better financially for a father to become a ranger, rather than to become a poacher?  

And what if that action, created a groundswell in China and Vietnam to help people understand that maybe, just maybe the preservation of a species is more valuable than a dubious aphrodisiac?

So, let's name some names - Biver, Hayek, Hoffmann, Sofisti, Stern, Marini, Raffi, Stas and all the rest of you -

Are you really interested in doing something great - or is it just talk and PR?  

What am I asking for?  $5,000 - that is WAY less than you spend on a month of advertising.  

Do you really want to make a mark in the world and not just talk about it?  Here is a chance to do it!

Who is in?