One of the largest Canadian jewelers said it is selling a third of its business to China after years of lobbying from its U.S. owner and some U.K. allies.
In the past year, Western Jewelry has signed deals with China’s largest private jewelry retailer and Chinese private wealth fund.
Western Jewelries CEO John Boulton said in an interview Tuesday that he has signed agreements with two Chinese firms that would be worth more than $300 million.
He declined to say what the deals were for, but he said the deals are “long-term commitments to help us better serve our customers.”
Western’s shares have plunged more than 13 per cent this year, and have lost almost 30 per cent of their value over the past two years.
Boul, a former vice-president of the Canadian Investment Corporation and one of the country’s most prominent investors, said he believes the new deals are an effort to diversify and attract foreign investment.
He said his U.L.I.P. investment group is currently in talks with Chinese companies that would invest $2 billion in Western’s U.H.I., a joint venture in the U.N.-designated World Heritage Site of Gansu.
“I think that’s really a sign that this is something that’s worth doing,” Boul said.
He did not provide details on the deals.
BOULTON SAYS HE HAS SIGNED AN ANALYSIS WITH ANOTHER COMPANY THAT WOULD BE WORTH $300 MILLION source CBC Vancouver article Western is not the only major Canadian jeweler to be part of the Chinese investment group.
It’s also one of a handful of firms that have been invited to participate in the Chinese government’s ambitious plan to revamp China’s diamond industry.
China’s government has announced plans to overhaul the industry by increasing production from 20 million stones to 100 million.
Western has been one of Western’s biggest customers and the company is now the second-largest private diamond producer in the world.
The deal with China is also the second such deal with the Chinese firm, which has already invested in some of Western Jewelrys biggest brands such as the Ritz Carlton, Tiffany and Gucci.
But the deal with Chinese private investment firm LIGI Holdings was a bit different.
The company said it would buy Western from LIGi for $400 million.
LIGA is a private company that owns several diamond mines, including one in the Gansuchan region of eastern China.
The Chinese company said that it will pay LIGAI $300,000 a year for the next 20 years, which is about half the value of what Western has earned.
Western said that LIGO will pay a much higher amount, as it has in the past.
Western will be able to buy back shares of LIGIA at an attractive price, Boul told CBC News.
“We’re going to be able, if we sell the shares at a reasonable price, to get an investment of $300 billion, and we’re hoping to get a share price of about $1.50,” he said.
LUGIA PUSHES FOR INTEREST BOULA said LIGUAS decision to invest in Western Jeweleries is a positive step for the Canadian economy.
“It means that Liguria will be in the position to benefit from the increased investment from Western and we can benefit from that investment in the long run,” said Boul.
LNG EXPANSION LIGUI will also invest $100 million to $150 million in new mines and a new plant to expand its refining capabilities.
It said that the $1 billion investment will bring the total value of Ligui investments in the sector to $350 million.
BOTTLES WERE PUSHED TO INVEST in CHINA’S DOWNGRADERS IN A NEW BOOK BY AUSTRALIA’s largest jewellery distributor, the Australia Group, to be published in early 2018.
The book, which was written by one of Australia’s top international bankers, is titled “The China Deal,” and says that while Western Jewelys deal with LIGIU is a major step in diversifying its business, there are more pressing issues in China that need to be addressed.
The group’s CEO, Peter Pudde, told CBC in an email that the book focuses on the role that LUGI has played in the recent rise of the “tigers” and “flies” in China’s economy, and how LIGUA has helped the Chinese market over the last several years.
Puddie said that although LIGIGU will be a key player in the next decade of investment in China, the Chinese state is taking its time to fully understand how it will work.
He added that LAGU will continue to work closely with Western to develop a partnership that is focused on growing the industry in China.
LAGUA TALKED ABOUT LIGIUM, AUSTR