Pascoe goes for some Aussie sparkle

James Pascoe plans to hold stake in jewellery chain until it increases in value. Picture / Paul Estcourt

Retailer James Pascoe has bought an 11.2 per cent stake in Australian jewellery chain Angus & Coote, but the Australian chain says it will struggle to gain a controlling stake.

The move by James Pascoe - the private company of Auckland's Norman family - has sparked talk of consolidation in the Australian retail jewellery sector, where it already owns the Prouds chain. As well as Pascoes here, the family own Stewart Dawson and Farmers.

James Pascoe spokesman Denham Shale said the company planned to hold its stake in the Australian company until it increased in value. It had no intention to buy more "at the moment".

"We think the shares are undervalued," said Shale.

An Angus & Coote spokesman said control of Australia's largest jewellery chain had remained in the Coote family for its 111-year history and was unlikely to be passed on.

Several investors - including the late, bankrupt tycoon Christopher Skase - had bought substantial stakes in the business previously.

"In the end, they realised they couldn't do anything unless the Coote family sold and they [the family] showed no interest whatsoever."

The company's executive chairman, Anthony Coote, known as Tony, and one of its directors, Margaret Allsopp, are grandchildren of one of the company's two founders.

The pair each have about 7.2 million shares in the company.

James Pascoe paid about A$7 million late on Tuesday for 1.3 million Angus & Coote shares at A$5.25 each. Shares closed that day at A$4.30.

Shale said: "The shares aren't traded that much and if you want to get a parcel you obviously have to pay a premium to entice someone to sell them to you."

Retail jewellery chains have found trading conditions tough in Australia this year, as high gold prices and the softening economy start to bite.

Angus & Coote expects profit for the year to be below break-even.