Swatch said it would take over the Harry Winston brand and all the activities related to its jewellery and watches business, as well as 535 of its employees worldwide.
"The acquisition, which is pricey, will add 5pc to Swatch sales and it should have a positive impact on earnings this year, as Swatch can pay with cash."
Swatch chairwoman Nayla Hayek said the deal made sense since "Harry Winston does brilliantly complement the prestige segment of the (Swatch) Group."
"Diamonds are still a girl's best friend," she added in the statement.
Harry Winston's chief executive Robert Gannicott also hailed the deal.
"The Harry Winston brand now has a new home that can provide the skills and support that it deserves to realise its true potential,"
The Swiss group will pay $750m (£467m) to acquire the company and add a maximum of $250m (£156m) to take over its net debt, a statement said.
Analysts were also enthusiastic about the purchase, although they said the price was steep.
"Overall the purchase makes sense, especially if (Swatch) is trying to expand in the jewellery segment of the market," Kepler analyst Jon Cox told the Dow Jones Newswires.
"In addition, Swatch is sitting on a lot of cash though the price certainly doesn't look cheap," he added. Vontobel analyst Rene Weber agreed.
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