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World Duty Free Shares Advance in Italian Debut: Milan Mover

Oct. 1 (Bloomberg) -- World Duty Free SpA shares rose on their Milan debut, beating analysts’ valuations, after the airport retailer was spun off from Autogrill SpA to gain more flexibility for possible mergers and acquisitions.

The shares rose as high as 7.60 euros and were trading at 7.50 euros at 1:29 p.m. in Milan, giving the company a market value of 1.91 billion euros ($2.6 billion). That’s 7.1 percent more than the 7-euro median estimate for the stock’s fair value in a survey of four analysts by Bloomberg News.

“We will consider consolidation, now we have new possibilities,” WDF Chief Executive Officer Jose Maria Palencia said in an interview in Milan at the debut ceremony at the Italian Exchange. “We have talks with everybody, it’s a small industry. We integrate, we don’t swallow companies.”

Autogrill has spun off its airport retail activities so WDF can seize growth opportunities through mergers and acquisitions. WDF, with shops in 101 airports in 20 countries, is targeting revenue growth of about 2.4 percent to 2.05 billion euros this year, with earnings before interest, tax, depreciation and amortization of as much as 260 million euros, compared with 262.3 million euros a year earlier.

Shares of Milan-based Autogrill, which kept the food and beverage business, climbed as much as 15 percent and were up 11 percent at 6.45 euros, valuing the company at 1.64 billion euros.

The air travel sector is “quite predictable,” and there is room to beat that market’s 5 percent average annual growth in coming years, Palencia said. For profit growth, the company is banking on spending in Europe by travelers from emerging markets, he said.

“WDF management will be focused on growth, with priority in Europe and Asia Pacific, trying to capture any opportunity both organic or non-organic, with joint ventures and business combinations,” Banca Akros wrote in a note to clients today.

To contact the reporter on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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