Gitanjali in race to buy US jewel major Whitehall for about Rs 400 cr

Gitanjali Gems, a leading jewellery retailer, is understood to be in the race to buy the US-based jewellery retail chain Whitehall Jewellers
Holdings, which filed for bankruptcy recently. The deal, if concluded, will be in the range of Rs 350 crore to Rs 400 crore, sources said.

Gitanjali’s bid for Whitehall is part of company’s move to strengthen its foothold in the US—the world’s biggest organised jewellery market. US diamond jewellery sales account for about 50% of the global diamond jewellery sales. Diamond jewellery sales comprise 55% of total jewellery sales in the US.

Gitanjali executive director GK Nair declined to comment specifically on the deal, but he reiterated the company’s strategy of growing through the acquisition route. “We have great interest in the US market and are looking to expand our operation in the US through the M&A route. We have enough cash on the balance sheet, which no other company in the industry in India has. We can leverage our balance sheet for any possible acquisitions,” he said.

In 2006, the Rs 2,600-crore company had acquired US-based Samuels Jewellers, which was one of the first acquisitions by an Indian firm in the global jewellery retail space.

Whitehall, controlled by private equity firm Prentice Capital Management, is the latest retailer to seek court protection from a US bankruptcy court, as the sagging US economy restricts consumers’ discretionary spending. A court filing says that the company wants to sell itself by July 18.

The US player operates 373 retail stores in 39 US states under the Whitehall and Lundstrom brand names, and employs 2,852 people. Many US-based large retailers have experienced significant losses and decreased sales following the general economic downturn there and tightening of the credit markets, among other factors.

Chicago-based Whitehall said it had lost money and suffered significant negative operating cash flow in each of the last three fiscal years. As part of a turnaround effort, the company had restructured some debt and closed 89 underperforming stores since 2005.