10/10/2012
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 marginsPost-synergy EV/EBITDA acquisition multiple of 7.9xTransaction 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).
