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
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
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.
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
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.
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
Rafael Duarte Mario Rolla
Investor Relations Media Relations
Phone +41 61 266 45 77 Phone: +55 21 2157 9611
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.
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
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