Media Release Basel, October 10, 2012 Dufry to add attractive business in major tourist destination - acquisition of majority stake in travel retail operations of Folli Follie Group Dufry has signed an agreement to acquire 51% of the travel retail business of Folli Follie Group. The business is the leading travel retailer in Greece with 111 shops, more than 18,000 square meters of retail space and an attractive concession portfolio with long duration. In 2011, the business generated turnover of EUR 291 million, of which more than 80% came from international customers. EBITDA in 2011 was EUR 84 million, with an EBITDA margin of 29.0%. The acquisition is consistent with Dufry's growth strategy focused on emerging markets and tourist destinations and will strengthen its position in the Mediterranean region, the world's biggest tourist destination. Folli Follie Group will carve-out its travel retail business, which will enter a new local non-recourse bank facility of EUR 335 million. Dufry will acquire a 51% shareholding in the target business for EUR 200.5 million. Dufry plans to finance the consideration for the 51% stake, as well as shareholder structuring of EUR 28 million and transaction costs through an equity increase of approximately EUR 250 million by issuing shares from existing authorized capital. Dufry has the option to acquire the remaining 49% in four years time at fair market value. Dufry will integrate the business into its existing operations and expects to generate significant synergies through increasing spend per passenger, gross margin improvements and reorganisation of back-office functions. Overall, Dufry estimates annual synergies to reach around EUR 10(1)million within 18 months of closing. The transaction has highly attractive financial metrics: *Target has industry-leading EBITDA margins *Post-synergy EV/EBITDA acquisition multiple of 7.9x *Transaction is Cash EPS accretive in first full-year (pre-synergies) With this transaction Dufry further strengthens its position as the leading global travel retailer: On a pro forma basis and based on current exchange rates, Dufry including Folli Follie's travel retail business, generated a combined turnover of approximately CHF 3,388 million and EBITDA of approximately CHF 553 million(2). Pure travel retailer in a major tourist destination Folli Follie Group's travel retail business is the leading travel retailer in Greece operating 111 duty free and duty paid shops with more than 18,000 square meters of retail space in 46 locations throughout the country in airports, seaports and border shops. The business holds an attractive concession portfolio to operate duty free shops in the whole of Greece until 2048. In 2011, the business generated a turnover of EUR 290.9 million (CHF 358.8 million(3)) and EBITDA of EUR 84.3 million (CHF 103.9 million(3)), showing an increase of 15.2% and 50.0%, respectively, versus 2010. In the first six months of 2012, turnover achieved approximately EUR 116.0 million (CHF 139.3 million(4)) and EBITDA reached around EUR 35.2 million (CHF 42.8 million(4)) with respective margin at 30.3%, compared to turnover of EUR 114.8 million and of EBITDA EUR 33.4 million in the first six months of 2011. As a popular tourist destination in the Mediterranean, the tourism industry in Greece has proven to be highly resilient during a difficult period for the local economy. Overall, the business generates more than 80% of its turnover with international customers. In 2011, the number of international tourists in the country increased by 9% and Greece received more than 16 million tourists, among which Germans and British were the most important visitors. The prospects for the future are also positive with the number of international tourist arrivals expected to grow by 4.5% per year(5). Strong fit to Dufry's current operations and substantial synergy potential The target business fits well into Dufry's operations. Currently present in several locations in Southern Europe and Northern Africa, Dufry will operate the business through its Region EMEA & Asia. Dufry foresees substantial synergies through the operational integration of the business and also improvements in the existing operations in the region. For a detailed description of Dufry's current business, see the "Company Report" on our website www.dufry.com/en/Investors/PresentationsPublications/. Based on Dufry's experience and expertise in quickly integrating acquired businesses, annual synergies of around EUR 10 million are expected within 18 months. These synergies are to be delivered mainly through procurement improvements, as the target business benefits from Dufry's global procurement platform. Additional synergies are also expected to come from higher spend per passenger and logistics and back office integration. Through the synergies mentioned before, Dufry expects the transaction to be mid-single digit EPS accretive on a cash basis already in 2013. Equity increase and new local non-recourse debt financing for target business; refinancing of existing debt at group level Dufry will pay a total consideration of EUR 200.5 million (approx. CHF 243 million(6)) for the 51% equity stake in the target business plus EUR 28 million for the shareholder structuring. The consideration for the equity stake and the shareholder structuring together with transaction costs is expected to be financed through a capital increase of approximately EUR 250 million. Dufry intends to raise this equity using existing authorized capital in due course to retain financial flexibility for future growth opportunities. The target business will be refinanced through a new credit facility of EUR 335 million. The new credit facility is agreed with a syndicate of local banks and will be structured as a committed 5-year amortizing term loan. The credit facility is structured as non-recourse debt secured only through pledging of 100% of shares of the target business. In addition, Dufry has refinanced its existing revolving credit facility (RCF) of CHF 415 million, which is due to expire in 2013, and has structured a new committed 5 year RCF of CHF 650 million with a syndicate of banks. The facility will be used for general corporate purposes and will have the same covenants as the existing Group credit facilities. For the refinancing of the remaining term loans expiring in 2013 of approximately CHF 502 million, Dufry is considering accessing the debt capital markets. In this context, Dufry is seeking corporate credit ratings from rating agencies. Such ratings will be confirmed shortly and are expected to be in the BB area. Next steps Folli Follie Group will immediately start the carve-out of its travel retail business, which involves a series of legal steps and requires various approvals. The transaction is expected to close after completion of this carve-out process and obtaining all relevant approvals, including governmental consents and the approval of Folli Follie Group shareholders, which based on current information is expected to be early next year. Dufry plans to execute the equity increase using existing authorized capital. An important step in the development of Dufry Julian Diaz, Dufry's CEO, commented: "I am very pleased about the transaction as I believe it represents another big step forward in our strategy to consolidate the fragmented travel retail industry, with focus on tourist destinations and emerging markets, and thus creating substantial value for our shareholders. The Mediterranean region, and in particular Greece, is one of the most popular tourist destinations in the world, with currently more than 80% of sales generated with international customers. The business is a compelling fit for Dufry's existing operations in the region. The combination of an attractive and long-term concession portfolio, prime tourist destination and diversified sales channels on the one hand and the potential synergies on the other make the business a very attractive one. Greece is expected to remain an attractive tourist destination, irrespective of the current economic situation of the country, as the business has demonstrated over the past two years. The strong 2011 performance of the business with an EBITDA of EUR 84 million is reflective of this. With more than 80% of sales generated with international customers, this is de facto an international business located in Greece. We are also very pleased to retain Folli Follie Group as our business partner going forward. The combination of Folli Follie's local expertise and Dufry's global reach will generate significant results for both companies, their clients, landlords, suppliers and other stakeholders. I would also like to welcome the management team and the 1,910 employees joining Dufry in this transaction. As a global group, Dufry will offer attractive perspectives and development opportunities to the new team." To access the full version of the press release, please click here. Important Notices This media release shall not constitute an offer to sell, or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. The securities discussed in this media release will not be and have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. Dufry has no intention to register any portion of the offering of these securities under the Securities Act. This media release contains projections and forward-looking statements, including statements regarding: the carve-out by the Folli Follie Group of its travel retail business; timing of the closing of the acquisition; integration of the travel retail operations into Dufry's business; timing and generation of synergies and financial results; financial metrics; improvements of existing operations; improved business terms with Dufry's suppliers; financings to fund the acquisition, including terms of indebtedness; and Greece's popularity as a tourist destination. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect current company expectations. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following: ability to execute our growth strategy effectively; to close acquisitions and to integrate successfully new operations and concessions or future acquisitions into our business; changes in general economic and market conditions; events outside our control that cause a reduction in airline and cruise line passenger traffic, including but not limited to terrorist attacks and economic downturns in Greece, the European Union or elsewhere; political, economic, legal and social uncertainties in Greece and our other markets; and ability to borrow from banks or raise funds in the capital markets. These forward-looking statements speak only as of the date of this media release. Except as required by any applicable law or regulation, Dufry expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The historical financial results of the travel retail business of the Folli Follie Group presented here reflect the historical results of the travel retail segment of the Folli Follie Group and may not necessarily reflect the historical results of the business that will be carved out of Folli Follie Group as part of this transaction. Also, the pro forma measures presented here, reflecting a combination of Dufry's historical results and the historical results of the travel retail segment of the Folli Follie Group, are presented for illustrative purposes only and do not purport to present what Dufry's results would have been had the transactions contemplated here occurred at the beginning of the periods for which pro forma measures are presented. Moreover, such pro forma measures do not project Dufry's future results or financial condition. For further information please contact: Sara Lizi Lubna Haj Issa Investor Relations Media Relations Phone: +55 21 2157 9901 Phone +41 61 266 44 46 firstname.lastname@example.org email@example.com Rafael Duarte Mario Rolla Investor Relations Media Relations Phone +41 61 266 45 77 Phone: +55 21 2157 9611 firstname.lastname@example.org email@example.com Dufry Group - A leading global travel retailer Dufry AG (SIX: DUFN; BM&FBOVESPA: DAGB11) is the leading global travel retailer operating more than 1'200 duty-free and duty-paid shops in airports, cruise lines, seaports, railway stations and downtown tourist areas. Dufry employs 14'000 people. The Company, headquartered in Basel, Switzerland, operates in 44 countries in Europe, Africa, Eurasia, Central America & Caribbean, North America and South America. Social Responsibility Dufry cares for children and supports the SOS Social Center in Igarassu, Brazil. SOS Children's villages is an independent, non-political and non-demonstrational organisation established for orphaned and destitute children all over the world.  Total synergies across 100% of business  Based on last twelve months financials ended 30 June, 2012  Based on average FX rate FY 2011 EUR/CHF: 1.233  Based on average FX rate HY 2012 EUR/CHF: 1.205  World Travel & Tourism Council, 2012  Based on FX rate as per 9 Oct, 2012, EUR/CHF: 1.211 Provider Channel Contact Tensid Ltd., Switzerland newsbox.ch Provider/Channel related enquiries www.tensid.ch www.newsbox.ch firstname.lastname@example.org +41 41 763 00 50
Dufry to add attractive business in major tourist destination -
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