World Duty Free Surges as Dufry Said to Be in Talks on Purchase

World Duty Free surged to an eight-month high in Milan after people familiar with the matter said the Italian airport retailer is holding discussions to combine with Dufry AG.

The Swiss company is in talks to acquire World Duty Free as it seeks to expand its global presence, said the people on Feb. 20, who asked not to be identified because talks are private. Dufry is holding advanced discussions with World Duty Free’s controlling shareholder, the Benetton family, one of them said.

World Duty Free rose as much as 5.3 percent and was trading up 3.9 percent to 10.03 euros at 10 a.m. in Milan, giving the company a market value of 2.55 billion euros ($2.9 billion). Trading volume in the first 90 minutes already surpassed the average daily total in the last 50 days.

While Dufry is seen as the best fit, the process remains competitive and other bidders are still interested in buying the

50.1 percent stake held by the Benettons, the people said.

Other potential bidders include buyout firm KKR & Co. and French media group Lagardere SCA, people said in January.

Completing any deal may be slowed down by Italy’s takeover rules, which require a bid for all outstanding shares when there is a change in control. Minority shareholders could than exercise withdrawal rights and sell back their shares to the company.

Potential Bidders

World Duty Free Chief Executive Officer Eugenio Andrades said last month that the Novara, Italy based company is open possible business combinations. Potential bidders started to look at the company’s financial data after World Duty Free presented its three-year strategy last month, the people said.

Edizione S.r.l., a holding company controlled by the Benettons, said last month that it is open to growth options for World Duty Free, that banks have requested information and no concrete offers have been made. Spokesmen for World Duty Free and Benetton declined to comment. A spokeswoman for Dufry also declined to comment.

Acquiring World Duty Free, which operates stores at airports including London’s Heathrow and Gatwick, would create a business with projected annual sales of about $9 billion. Dufry CEO Julian Diaz has expanded the Swiss company through about a dozen acquisitions in the past decade, creating a dominant operator in the field of travel retailing.

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 percent stake since the company was spun off from Autogrill SpA and began trading independently in 2013. The family would consider reducing its stake in a combination and favors an industrial partner, one of the people said.

For Dufry, the potential acquisition would be its second major transaction in less than a year, after the company in June agreed to buy Nuance Group for $1.7 billion. A purchase of all of World Duty Free could become Dufry’s largest acquisition ever.

Dufry purchased the Hudson News chain in 2008 and has built a network of more than 1,700 shops in airports, cruise liners, ports and other tourist destinations.

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