Dufry has signed an agreement to acquire 51 percent of the travel retail business of the Folli Follie Group. The business is the leading travel retailer in Greece with 111 shops and a concession portfolio. In 2011, the business generated revenues of EUR 291 million, of which more than 80 percent came from international customers.
Dufry said the acquisition is consistent with its strategy focused on emerging markets and tourist destinations and will strengthen its position in the Mediterranean region, the world’s biggest tourist destination.
The 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 reorganization of back-office functions. Overall, Dufry estimates annual synergies to reach around EUR 10 million within 18 months of closing.
Dufry said the transaction will strengthens its position as a 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.
As a popular tourist destination in the Mediterranean, the tourism industry in Greece has proven to be highly resilient during a difficult period for the local economy, according to statement by Dufry. Overall, the business generates more than 80 percent of its turnover with international customers. In 2011, the number of international tourists in the country increased by 9 percent and Greece received more than 16 million tourists, among which Germans and British were the most important visitors. The prospects for the future are also positive with the number of international tourist arrivals expected to grow by 4.5 percent per year.
Dufry is currently present in several locations in Southern Europe and Northern Africa, and will operate the business through its Region EMEA & Asia.
Greece is expected to remain an attractive tourist destination, irrespective of the current economic situation of the country, as the business has demonstrated over the past two years. The strong 2011 performance of the business with an EBITDA of EUR 84 million is reflective of this. With more than 80 percent of sales generated with international customers, this is de facto an international business located in Greece, according to a Dufry statement.