Dufry Agrees to Buy World Duty Free Stake From Benettons

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Switzerland’s Dufry AG agreed to buy a majority stake in Italian airport retailer World Duty Free SpA for 1.3 billion euros ($1.4 billion) to expand globally.

Edizione Srl, a holding company controlled by the Benetton family, and its investment vehicle Schematrentaquattro SpA agreed to sell the 50.1 percent stake for 10.25 euros a share, according to an e-mailed statement from March 28. The price represents a premium of about 22 percent on the volume-weighted average share price in the past six months, the statement said.

The closing of the sale, expected in the third quarter, is subject to the approval by Dufry’s shareholders of a capital increase aimed at partially financing the transaction and the approval of antitrust authorities. Dufry will then start a mandatory bid for the rest of the shares.

Dufry’s offer values World Duty Free at about 3.6 billion Swiss francs ($3.74 billion) including equity and debt, according to people familiar with the matter. The Swiss buyer is planning to raise about 3.8 billion Swiss francs in equity and debt to cover the full purchase and additional costs, said the people, who asked not to be identified because talks are private.

This will include a share sale of about 2.2 billion francs, of which 1.35 billion francs may come from sovereign wealth funds including Qatar Investment Authority and Singapore’s GIC Pte and Temasek Holdings Pte, and the rest from the underwriting banks, the people said. Another 1.6 billion francs will come from debt, split between high-yield bonds and bank loans, they said. Dufry declined to comment and QIA, GIC and Temasek couldn’t be immediately reached by e-mail.

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 Chief Executive Officer 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. It acquired Hudson News, a chain of U.S. airport shops, in 2008.

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 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 Korean competitor Lotte, people said in January.

World Duty Free closed at 10.96 euros on Friday in Milan trading, giving it a market value of 2.8 billion euros. Edizione and Schematrentaquattro were 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.