Dufry and Autogrill to combine under Benneton family control

Swiss duty-free giant Dufry and Italian travel caterer Autogrill announced plans to combine on Monday, creating a travel retail giant worth £11.6bn in pro forma revenue.

The Zurich-traded Dufry said it would acquire shares in the Milan-listed Autogrill through a mandatory tender offer, after Italian holding company Edizione transfers its 50.3% stake in Autogrill to Dufry.

It said Edizione, controlled by the Benneton family, would receive 0.158 new Dufry shares for each Autogrill share, and would become the major shareholder of the combined entity.

The combined entity would serve 2.3 billion passengers in more than 75 countries across around 5,500 outlets at 1,200 airports and other locations, the firm said, with CHF 13.6 billion (£11.6bn) in 2019 pro forma revenue and EBITDA of CHF 1.4 billion by the same pre-IFRS 16 measure.

Dufry said the “transformational combination” represented a “complementary strategic fit”, and would support its new long-term strategy.

It said it would “significantly strengthen” its presence in the “highly attractive and resilient” United States market, while adding opportunities in other key geographies including Asia-Pacific, Latin America, the Middle East and Africa.

The combination would bring together two groups of “highly experienced and strongly engaged” professionals, the company claimed, led by current Dufry chief executive Xavier Rossinyol as CEO of the combined group.

Dufry shareholders would benefit from equity free cash flow per share accretion in the first year after closing based on cost synergies with annual run-rate of about CHF 85m.

The enlarged entity would have a “strengthened” balance sheet, with lower financial leverage compared to Dufry on a standalone basis, targeting a leverage level below 3x.

“I am very happy to lead this transformative combination, which I am sure will reinforce the new group strategy and will create sustainable long-term value for our customers and shareholders,” said Xavier Rossinyol.

“We are transforming our industry and redefining its boundaries, and we will create a new

corporate identity to reflect this fundamental move.

“By executing on this unique opportunity, we will accelerate growth by fully focusing on consumers and the digital revolution, by offering additional value to landlords and airport partners with an expanded service portfolio, while further diversifying the group and increasing our resilience.”

In addition to Dufry-branded duty free and travel retail outlets, the company also owns US travel retail giant Hudson, Asia-Pacific focussed Nuance Group, World Duty Free, Hellenic Duty Free Shops, Reg Staer, Colombian Emeralds, Duty Free Uruguay, and Duty Free Shop Argentina.

Autogrill, meanwhile, operates a portfolio of 300 international and local brands in the travel catering space, and previously owned the World Duty Free group before spinning it off as a separately-listed firm in 2013, which was subsequently acquired by Dufry.

“A new cycle opens that will allow us to unleash a whole array of options centred around the needs of travellers worldwide,” said Autogrill CEO Gianmario Tondato da Ruos.

“The business combination will enable a flurry of innovations in its offerings, which will translate into more enjoyable travel experiences across various geographies and channels.

“It represents an outstanding value creation opportunity for our stakeholders.”

At 1245 CEST (1145 BST), shares in Dufry were up 8.9% in Zurich at CHF 34.02, while Autogrill was down 6.54% in Milan at €6.40.

Reporting by Josh White at Sharecast.com.