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Business News/ Companies / Dufry to buy airport retailer World Duty Free for $2.8 billion
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Dufry to buy airport retailer World Duty Free for $2.8 billion

Dufry AG's plans to acquire its Italian rival will form a company that will operate almost a quarter of the airport retail market

Dufry forecast the purchase will boost cash earnings per share by a double-digit percentage in the second year after the acquisition. Photo: ReutersPremium
Dufry forecast the purchase will boost cash earnings per share by a double-digit percentage in the second year after the acquisition. Photo: Reuters

Milan/London: Switzerland’s Dufry AG plans to acquire Italian rival World Duty Free SpA for €2.6 billion ($2.8 billion), forming a company that will operate almost a quarter of the airport retail market.

After buying a 50.1% stake from a company controlled by the Benetton family, Dufry said it will make an offer for the rest of World Duty Free, which operates stores at airports including London’s Heathrow and Gatwick. The price is 16% above the closing level on 28 January, the day before Bloomberg reported Dufry was considering a bid for World Duty Free, though it’s 6.5% lower than Friday’s close.

“This will significantly strengthen the group’s economic power and business opportunities for future growth, but it should also come with restructuring costs, a capital increase and a higher net debt," wrote Volker Bosse, an analyst at Baader Bank, in a note to investors.

Funding will be provided by the Singaporean sovereign-wealth fund GIC Pte, the Qatar Investment Authority and Temasek Holdings Pte, which will each invest as much as 450 million francs in Dufry. The deal is a feather in the cap of Dufry chief executive officer Julian Diaz, who has expanded the Swiss company through about a dozen acquisitions in the past decade, creating a dominant operator in the field of travel retailing.

Including debt, the transaction values World Duty Free at €3.6 billion, Dufry said in an emailed statement.

Deal financing

Dufry will initially finance the transaction through a bridge facility of that amount, which it will refinance by selling at least €2.1 billion of equity and with as much as €1.5 billion of debt, the company said in a statement on Monday. The retailer also forecast the purchase will boost cash earnings per share by a double-digit percentage in the second year after the acquisition.

Acquiring World Duty Free would create a business with a 24% market share in airport retail. Dufry acquired Hudson News, a chain of US airport shops, in 2008.

World Duty Free operates 495 stores in 19 countries and 98 airports across the world, according to its website. The Benetton family has held a controlling 50.1% stake since the company was spun off from Autogrill SpA and began trading independently in 2013. The two companies combined would have had 2014 sales of more than $8 billion.

The Swiss company was in advanced talks to acquire World Duty Free, people familiar with the matter said on 20 February, asking not to be identified because the talks were private. Other potential bidders had included Korean competitor Lotte, people said in January.

The Benetton family’s Edizione Srl was assisted by Bank of America Merrill Lynch, while World Duty Free was advised by Deutsche Bank AG. Dufry is working with Goldman Sachs Group Inc., UBS Group AG and Credit Suisse Group AG.

Bloomberg

Aaron Kirchfeld in London, Jacqueline Simmons in Paris and Corinne Gretler in Zurich contributed to this story.

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Published: 30 Mar 2015, 05:28 PM IST
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