Gatemore Capital Management, an activist investor, has called on Watches of Switzerland (formerly Watches of Switzerland) to move to New York and join the exodus of London listed companies.
Gatemore, the company that holds 1.9 million shares or 0.8% of the luxury retailer’s stock, has urged the bosses of the company to take action to “fully unlock” the stock value.
The activist claimed that listing in New York will provide Watches of Switzerland access to deeper pools of funds, increased liquidity and greater exposure to long-term investor.
Gatemore said that the move will allow the retailer make the most out of its growth in the United States where the company believes it will generate the majority of its future revenues.
Watches Of Switzerland generated 45 percent of its revenue in the US during the year ending April 28, 2008. Gatemore predicts that the American market is expected to contribute 60 percent of sales by 2028.
Following a profit warning issued in January, shares in Watches of Switzerland are down more than 35% since the beginning of the year.
Gatemore urged the FTSE 250 retailer last month to buy back shares between 25 million and 50 million pounds sterling. The activist claimed that the buyback would “reinforce the board’s faith in the business”, and confirm its commitment to maximising shareholders returns.
The UK stock market has seen a significant increase in the number companies that have chosen to list their shares outside of London. This is due to the lower valuations in comparison to the US, which makes it difficult for Britain to keep companies and attract initial public offering.
Liad Miedar, Gatemore’s managing partner, stated that Watches Of Switzerland, with its “clear leading position” in the UK, was “well-positioned to unlock further growth in the vast and under-penetrated US Market”.
He said that the company should look at acquiring other watch retailers in the US and possible takeover deals.
If Watches of Switzerland were to move to the US it would be joining a number of London-listed companies who have been drawn to New York’s stock exchange.
CRH (the building materials group) made its move in September of 2023. Flutter Entertainment (the owner of Paddy Power and Betfair) and Indivior (the drugs manufacturer) both moved this year. CRH shares have risen by over 60 per cent in the past year since its move to a primary listing.
The government and City regulators have been prompted by concerns about the future of London Stock Exchange to implement a number of reforms that aim to make the UK an attractive place for companies looking to go public. The reforms include an overhaul of the listing regulations, which went into effect in July.
Watches of Switzerland shares closed Wednesday at 433 1/2p down 3 1/2p or 0.8%.
Watches Of Switzerland was contacted to get a comment.
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