CORDER’S COLUMN: Why did Rolex buy Bucherer and what happens next?

To preserve the long-standing partnership between the two companies and perpetuate their shared history, Rolex has decided to acquire Bucherer.

The watch retailer will keep its name and continue to operate independently.

These are the two simple sentences that have every Rolex retailer across the globe shuddering at the thought of what will come next.

First, the why.

Rolex says that it bought Bucherer because its owner, Jörg Bucherer, having no direct descendants to pass it down to, had decided to sell.

That is not a complete surprise to industry insiders.

But why Rolex?

“To preserve the long-standing partnership between the two companies and perpetuate their shared history,” we are told.

Why not sell to another retail group with the financial muscle of, say, Watches of Switzerland Group (currently valued at £1.7 billion, and with deep ties into financial markets if additional capital needed to be raised).

Huge Asian retail groups like The Hour Glass in Singapore or Chow Tai Fook in Hong Kong would have been options, or Ahmed Seddiqi out of Dubai. All three could surely have met any asking price.

LVMH bought Tiffany for $16 billion. Was Bucherer next on the habitually acquisitive empire’s shopping list?

Private equity firms like Apollo Global Management, once owner of Watches of Switzerland Group, or CVC Capital Partners, current owner of Breitling, would have been interested.

I suspect more than one of the above will have been attempting to make this deal.

However, Rolex should be taken at its word. Its relationship with Bucherer through their shared 90 years of history together as Swiss-based organisations who impeccably trust each other is likely to have been the deciding factor.

This is a negotiation that had to be contained within a very small group of individuals.

Now to the question of what next?

This is where the secrecy not only around this deal, but around Rolex, the privately-owned Bucherer and the Swiss in general, makes it impossible to know.

We can only speculate.

“Bucherer will keep its name and continue to independently run its business. The Group’s management team will remain unchanged,” Rolex states.

It would be naive to imagine this will be entirely true. Of course Bucherer will have its biggest strategic decisions parsed by Rolex, which is now in the business of retailing for the first time, aside from one store in Geneva.

Tomorrow morning, the watch world will still be on its axis. Every Bucherer store will open as usual, offering watches from Patek Philippe, Cartier, Omega, Breitling, TAG Heuer and myriad other brands that are direct rivals to Rolex and Tudor.

Likewise, every authorised dealer of Rolex and Tudor will be trading as usual.

Over time, however, there is potential for this deal to be earth-shattering for the industry.

The apocalyptic version of the future would see Rolex slowly transition its entire global sales into Bucherer, effectively selling direct to consumers and cutting hundreds of authorised dealers worldwide out of the Rolex market.

Keep an eye on the share price of Watches of Switzerland Group in the morning to see how likely investors think this is. The news broke 5 minutes before the closing bell of the London Stock Exchange.

This feels vanishingly unlikely to me, but almost every luxury watch retailer in the world that has Rolex and Tudor will be losing sleep tonight.

Rolex mentions that the deal has to be approved by competition authorities; presumably COMCO in Switzerland since this is an entirely private transaction that won’t be scrutinised by any financial market regulator.

Keeping Bucherer’s ownership in Swiss hands will surely make this a rubber-stamping exercise.

Ultimately, Rolex can do what it likes with Bucherer, but it is in no position to replace hundreds of ADs across the world, certainly not in the near term.

Might it favour Bucherer with better allocations of watches?

Again, unlikely, because this would be open to legal challenge since there are contracts between Rolex and its retail partners.

My hunch is that, once the coming hours of hysteria have died down, very little will change.

The problem is that it could very well change in the years to come, but that is a risk everybody that has supped with Rolex has been running for decades.