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Gitanjali Gems [Get Quote] is close to acquiring a US-based jewellery retail chain with sales of about $100 million.
The deal, if it goes through, would be the company's second acquisition in the world's largest jewellery market. Though the deal size and name of the company could not be ascertained, sources said that the acquisition is expected to be completed in 30 days.
The target company has around 60 jewellery stores in the US. When contacted Mehul Choksi, chairman, Gitanjali Gems, refused to comment on the developments.
Gitanjali Gems is looking at raising capital for its acquisition and expansion plans. It has proposed to garner around Rs 320 crore (Rs 3.2 billion) by issuing 10 million convertible equity warrants to the promoters on a preferential basis. An EGM has been convened on November 3 to consider the fund-raising plans.
Gitanjali Gems bought the US-based Rs 450-crore (Rs 4.5 billion) jewellery chain Samuels last December, marking its maiden acquisition in the gems and jewellery space. Samuels has 100 stores in the US, with sales of Rs 500 crore (Rs 5 billion) and a back-end capacity for 150 new stores.
The acquisition enabled the company to cut down at least three layers of middlemen in diamond polishing and manufacturing and gaining control of the value chain, Choksi had told Business Standard earlier.
Gitanjali has already expressed its intention to create brands for the US market. Earlier this year, the company bought 70 per cent stake in Tri-Star Worldwide, a Canada mark licensee and a direct customer of BHP Billiton. The tie-up would enable Gitanjali to increase its diamond sourcing from the Canadian mine.
The company plans to invest Rs 100 crore (Rs 1 billion) over two years for its domestic retail plans. It is in the process of establishing luxury malls and introducing international brands in the country.
Gitanjali Gems reported a 56 per cent increase in net profit at Rs 40.8 crore (Rs 408 million) for the quarter ended September 30, 2007. The company's consolidated revenues grew by 56 per cent to Rs 1,132 crore (Rs 11.32 billion) as against Rs 738.8 crore (Rs 7.38 billion) in the same period last year.
Acquisition spree
February, 2007: Acquired 70 per cent stake in Canada-based Tri-Star Worldwide, a branded diamonds and jewellery maker, for an undisclosed sum.
December 2006: Snapped up 97 per cent stake in US-based Samuels Jewellers, a jewellery retailer, for Rs 100 crore.
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