* Deal would complete PPR watch range at top end
* Could value Richard Mille at 340-400 mln sfr-source
* Transaction unlikely to close before early 2014
(Adds details, quotes from analyst and other sources)
By Astrid Wendlandt and Pascale Denis
PARIS, June 17 French luxury and sports brands
group PPR is in talks to buy control of Richard Mille,
one of the most expensive watch brands on the market, an
industry source with first-hand knowledge of the matter told
The deal could value Richard Mille at 340-400 million Swiss
francs, or 2.5-3 times its expected 2013 revenues of 135 million
Swiss francs ($146.60 million), said the source, who requested
The acquisition of the Swiss-made watch brand, whose
barrel-shaped timepieces start at 60,000 euros, would enable PPR
to complete its price-range pyramid with JeanRichard at the
bottom, Girard-Perregaux in the middle and Richard Mille at the
PPR would at first acquire 51 percent of Richard Mille with
the possibility of raising its stake further, while Richard
Mille would be locked in the business as chief executive and
shareholder for a number of years, the source added.
The transaction is unlikely to close before early 2014 at
the request of Mille who needs to settle private affairs before
going ahead with a sale, the source said.
"The talks are ongoing...The ball is in Mille's camp," the
source said on condition of anonymity.
PPR and Richard Mille are not yet officially in exclusive
talks but could be in the next few weeks, and PPR has already
had full access to Richard Mille's books, the source added.
Richard Mille and PPR, which is expected to change its name
to Kering at its annual general meeting on Tuesday, declined to
Richard Mille founded the watch brand in 2001 with the help
of privately held Swiss brand Audemars Piguet which supplies it
with movements and owns a 10 percent stake.
Audemars Piguet is expected to remain a shareholder and
continue working with Richard Mille even if PPR buys control,
another source close to Audemars Piguet told Reuters.
"For the moment, there is no deal on the table but the day
there is one, I think the two brands will want to continue to
work together and Audemars Piguet will want to stay on board,"
the source said, declining to be named.
Richard Mille has been successful at elbowing its way into
the market with titanium and carbon composite hand-finished
watches retailing for as much as 1.6 million euros.
The brand's sales reached 112 million Swiss francs in 2012
and has a ratio of earnings before interest, tax, depreciation
and amortisation (Ebitda) to sales of more than 40 percent, one
of the highest of the industry, the source said.
Its sales growth rate in recent years has remained above 10
percent, it added.
"Three times sales seems realistic," said Rene Weber,
analyst at Vontobel, pointing out that LVMH, the
world's biggest luxury brand, paid more than three times annual
sales for Roman jeweller Bulgari in 2011.
The source said PPR was one of several potential buyers as
investors from Asia and Russia had expressed interest but
Richard Mille preferred to team up with PPR "to ensure its
A third source close to the matter said LVMH, the
world's biggest luxury group which owns watch brands Tag Heuer
and Zenith, was not interested in buying control of Richard
Mille. LVMH also declined to comment.
Richard Mille has not been hit by the general slowdown in
high-end watch sales which has affected big groups such as
Swatch and Richemont, the source said.
However, critics of the deal pointed out that Richard Mille
was a "marketing brand" which did not have strong movement
manufacturing capabilities which was a major industry issue as
supplies were getting tighter.
PPR, which owns jeweller Boucheron and fashion brands Gucci
and Yves Saint Laurent, has made expansion in watches and
jewellery one of its top priorities and said acquisition targets
would be mid-sized businesses with solid growth potential.
Last year, PPR acquired Chinese jeweller Qeelin and it
announced in April a deal to buy Milanese jeweller
($1 = 0.7496 euros)
($1 = 0.9209 Swiss francs)
(Additional reporting by Silke Koltrowitz; Editing by Mark John
and Pravin Char)