Travel retailer Dufry to raise $4bn to finance WDF bid

Dufry, the Swiss duty-free store operator, proposes to raise some €3.6bn (£2.6bn, $4bn) through a mixture of debt and equity for its planned buyout of Italian rival World Duty Free (WDF).

Dufry plans to purchase a 50.1% stake in WDF, from Italian holding company Edizione, and will make a mandatory offer for the remaining shares.

To finance the purchase, Dufry expects to raise at least €2.1bn through a rights issue of new stock and up to €1.5bn via long-term debt instruments, the Swiss firm said in a 30 March statement.

Qatar Investment Authority, Government of Singapore Investment (GIC) and Singaporean investment firm Temasek Holdings have each committed to buying up to CHF 450m ($465m) worth of shares.

Dufry expects to detail the exact terms of the rights issue before a general shareholder meeting, to be held by 15 May 2015.

Shares

Dufry stock was trading 4.51% higher at 09.33am in Zurich.

WDF's stock dropped and was trading 8.21% lower at 09.48am in Milan.

A deal will cement Basel-based Dufry's position as the world's leading travel retailer, creating a combined group with a market share of about 24% and projected annual sales of $9bn, Reuters reported.

Edizione, owned by Italy's Benetton family that controls WDF, agreed to sell its 50.1% stake to Dufry for €10.25 euros a share, valuing the group at just under €3.6bn including debt, which stood at €970m, Edizione said on 28 March.

Total retail spending at airports the worldover is expected to nearly double to $59bn in 2019 from $36.8bn in 2014, analysts predict, driven by rapid growth in Asia, where more than 350 new airports are set to be built over the next eight years.

Dufry bought domestic rival Nuance Group for CHF 1.55bn last June.