Harry Winston Diamond Corp. (NYSE: HWD) announced this morning that it has agreed to sell its luxury brand diamond jewelry and watch division, Harry Winston Inc., to Swiss-based The Swatch Group Ltd. for $750 million and the assumption by Swatch of $250 million in net debt.

The most interesting part of the deal is that once it is closed, Harry Winston Diamond Corp. will change its name to Dominion Diamond Corp. Swatch does not want any brand confusion, and it has paid a premium price to get what it wants.

In November, Harry Winston acquired a Canadian diamond mine from BHP Billiton PLC (NYSE: BHP) for $500 million. The company already owns a 40% stake in another Canadian diamond mine that is majority owned and operated by Rio Tinto PLC (NYSE: RIO).

We noted at the time that major mining companies like BHP and Rio Tinto have been actively trying to shed their diamond mining properties. Apparently Harry Winston saw an opportunity here to refashion itself as the DeBeers of the Western Hemisphere. The company’s CEO said today:

At the time that we purchased the Harry Winston brand, resource investment opportunities for diamonds were rare and expensive following the euphoria of the Canadian diamond discoveries, and the involvement of the large international mining companies. … Today there is a range of diamond resource opportunities while the value of heritage luxury brands has increased dramatically. This transaction represents a sound return on our original investment. It will leave us well equipped to realize upstream opportunities in an environment where cash has become a strategic resource while preserving and expanding our relationship with the downstream diamond business.

Shares of Harry Winston Diamond Corp. are up about 23% in premarket trading this morning, at $17.81 in a previous 52-week range of $10.32 to $15.92.

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