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Pandora buys Spanish distributor City Time for €110M

Danish jeweler Pandora A/S said Aug. 8 that it plans to acquire Spanish distributor City Time SL for €110 million to take full control of distribution in Spain, Gibraltar and Andorra as part of its wider strategy of gaining stronger sales rights worldwide.

If completed, the acquisition of Alcobendas, Spain-based City Time will enable Pandora to directly enter the Spanish market. City Time has been the distributor in Spain since 2005 for Pandora, which is based in Copenhagen and whose signature products include charms and bracelets. Under the agreement, the company will gain 51 Pandora-owned concept stores in Spain and take over distribution of 15 franchisee concept stores and about 500 other sales points in Spain, Gibraltar and Andorra.

"By taking over the distribution of Pandora jewelry in Spain, we get direct access to one of the larger jewelry markets in Europe," Pandora CEO Anders Colding Friis said in a statement. "The acquisition is in line with our strategic intent to take over distribution and enables us to gain full control of the network in Spain and realize the full potential of our brand in this promising market."

The Spanish market, which represents a majority of the three locations, is approximately €1.6 billion, and one of the largest markets in Europe, a Pandora spokesperson said, citing EuroMonitor. As such, it is "very interesting for Pandora to take full control" of, the spokesperson told S&P Global Market Intelligence.

Since becoming a publicly traded company in 2010, Pandora has been steadily taking stronger control of distribution across regions. In 2011, the company started direct distribution of jewelry products in France, while in 2016, Pandora acquired the Pandora store network in Singapore and Macau from Norbreeze Group. In June, Pandora took over the distribution network in Belgium, and in July it acquired the distribution of South Africa and the nearby regions from Scandinavian Brand House.

The acquisition of City Time is expected to be completed in fourth quarter 2017, Pandora said, adding that the deal will have no impact on its earnings outlook for 2017.

Pandora, which also announced second-quarter results Aug. 8, said group revenue rose 12% to 4.82 billion Danish kroner, compared to the same quarter a year earlier. The company also maintained its outlook for full year 2017, calling for revenue of between 23 billion and 24 billion Danish kroner and an EBITDA margin of about 38%.

The company also makes and sells rings, earrings and necklaces, and has a presence across six continents. As of June 30, Europe, the Middle East and Africa represented 43% of Pandora's revenue, while the Americas accounted for 34% and Asia Pacific 23%, according to the company's Aug. 8 disclosure.

As of Aug.8, US$1 was equivalent to 6.33 Danish kroner.