Switzerland’s Dufry AG plans to acquire Italian rival World Duty Free SpA for 2.6 billion euros (US$2.8 billion), forming a company that would operate almost a quarter of the airport retail market.
After buying a 50.1 percent stake from a company controlled by the Benetton family, Dufry said it would 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 percent above the closing level on Jan. 28, the day before Bloomberg reported Dufry was considering a bid for World Duty Free, although it is 6.5 percent lower than the on Friday in Milam.
“This [acquisition] 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,” Baader Bank analyst Volker Bosse wrote in a note to investors.
Funding is to be provided by Singaporean sovereign-wealth fund GIC Pte, the Qatar Investment Authority and Temasek Holdings Pte, which each are to invest as much as 450 million francs (US$466.3 million) in Dufry.
The deal is a feather in the cap of Dufry chief executive Julian Diaz, who has expanded the Swiss company through about a dozen acquisitions in the past decade, creating a dominant operator in the field.
Including debt, the transaction values World Duty Free at 3.6 billion euros, Dufry said in an statement.
Dufry will initially finance the transaction through a bridge facility of that amount, which it will refinance by selling at least 2.1 billion euros of equity and with as much as 1.5 billion euros of debt, it said in a statement yesterday.
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 percent 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 Web site. The Benetton family has held a controlling 50.1 percent stake since the company was spun off from Autogrill SpA and began trading independently in 2013. The two companies combined would have had sales of more than US$8 billion last year.
The Swiss company was in advanced talks to acquire World Duty Free, people familiar with the matter said on Feb. 20, asking not to be identified because the talks were private.
Other potential bidders had included South Korean competitor Lotte, sources said in January.
The Benetton family’s Edizione Srl holding company 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.
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