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Shares in Watches of Switzerland dropped more than a quarter on Friday after Rolex, the UK retailer’s main supplier of luxury timepieces, bought rival chain Bucherer.

The acquisition for an undisclosed amount marks Rolex’s first big foray into retail, sparking concerns that the Swiss manufacturer could seek to sell more of its watches directly to consumers and cut out companies such as Watches of Switzerland.

WoS, also a purveyor of Omega, Piguet and Cartier watches, insisted on Friday that there would be no change in the “processes of product allocation or distribution” by Rolex after it spoke to senior managers at the manufacturer.

However, some analysts warned the deal could have a substantial impact on the UK retailer, which generates 55 per cent of its revenues from Rolex products.

The shares were down 23.5 per cent, or 163.5p, to 530p in morning trading in London after they clawed back even heavier early losses.

The tie-up between Rolex and Bucherer was “likely to weigh heavy” on WoS, said analysts at Peel Hunt. They said it was “almost impossible to believe” that the two companies would remain independent.

Both Rolex and WoS said the trigger for the deal was the issue of management succession. Jörg Bucherer, the 86-year-old grandson of eponymous founder Carl Bucherer, has no heirs.

Given the leadership uncertainty, Rolex said it wanted to safeguard the operational stability of one of its most important distribution partners.

Analysts at RBC Capital Markets were more relaxed about the consequences for WoS, saying the drop in its share price was based on “unsubstantiated fears”.

They noted the UK company had a 7 per cent share of the global market for Rolex products.

Bucherer has 15 stores in its home Swiss market, 30 in the US, five in the UK and five in Germany. It is also present in France, Austria and Denmark.