Chow Tai Fook has agreed to buy U.S.-based luxury diamond brand Hearts On Fire Company in a cash deal valued at $150 million. The deal is subject to regulatory approval and is part of the Chow Tai Fook's strategy to promote and expand its high-end product range.
Following completion of the acquisition, Chow Tai Fook will operate Hearts On Fire as a separate division. Within six months of the closing, the group plans to sell Hearts On Fire's products through its existing distribution network in tier I and tier II cities in Mainland China, Hong Kong, Macau and other Asian markets.
Hearts On Fire was founded in 1996 by Glenn and Susan Rothman. The company offers premium bridal and fashion jewelry products at 500 locations in 31 countries. The company reported that net sales rose 6 percent year on year to $104.8 million in 2013. Approximately 75 percent of Hearts On Fire’s jewelry sales in 2013 were between $1,000 and $10,000, with most of the remaining items priced above $10,000.
Chow Tai Fook's chairman, Henry Cheng, said, “We welcome Hearts On Fire as our valuable partner that shares the same vision for high-quality and innovative products. The proposed acquisition is a strategic move to complement our product portfolio with an exclusive premium diamond jewelry line and to raise our profile as world-class diamond expert in the jewelry industry.”
Kent Wong, the managing director of Chow Tai Fook, said, "Hearts On Fire is a best-selling luxury diamond brand with strong consumer awareness and its product offerings are ideal additions to our existing portfolio. The acquisition is in line with the group’s strategy to optimize product mix and promote higher value products to match the spending profiles of consumers. Given its proven track record not only in the western markets but also in Taiwan, the group is confident that the Hearts On Fire products will be well received in our major markets, including Hong Kong, Macau and Mainland China, where diamond jewelry is increasingly popular.”
Hearts On Fire owns proprietary cutting and polishing technology, employs master craftsmen and designers and is highly acclaimed for producing The World’s Most Perfectly Cut Diamond®. The brand has a global presence at more than 500 locations in 31 countries, with U.S. being its largest market.
Glenn Rothman said, “Chow Tai Fook brings to the Hearts On Fire retail distribution channel powerful financial resources, high-tech manufacturing capacity, and their innovative culture of creative talent. These best-in-industry resources will provide Hearts On Fire the support and opportunity to expand exponentially, as we enter new markets, leveraging Chow Tai Fook’s leadership in the jewelry industry and its extensive retail network in Greater China. This is an unprecedented opportunity to grow the Hearts On Fire brand and reach millions of new customers.”
Chow Tai Fook is the world's largest jewelry retailer by market value. The group reported that revenue jumped 34.8 percent to $10 billion, while profit rose 31 percent to $970 million in the fiscal year that ended on March 31.