Temasek, GIC to invest S$642m each in Swiss travel retailer Dufry

BASEL — Singapore investment giant Temasek Holdings and sovereign fund GIC will invest up to 450 million Swiss francs (S$642.3 million) each in Switzerland’s travel retailer Dufry to help it finance the acquisition of Italian rival World Duty Free to form a company that will operate almost a quarter of the world’s airport retail market.

Basel-based Dufry plans to acquire World Duty Free — which operates 495 stores in 98 airports in 19 countries — for €3.6 billion (S$5.4 billion), including debt.

After buying a 50.1 per cent stake from a company controlled by the Benetton family of Italy at €10.25 per share, Dufry said yesterday it is making an offer for the rest of World Duty Free at that price.

Acquiring World Duty Free will create a business with a 24 per cent market share in airport retail and projected annual sales of US$9 billion (S$12.4 billion). This would cement Dufry’s position as the world’s biggest player in the fast-growing sector with a presence in 67 countries.

“This will significantly strengthen the group’s economic power and business opportunities for future growth, but it should also come with restructuring costs, a capital increase and a higher net debt,” said Mr Volker Bosse, an analyst at Baader Bank.

Dufry will finance the deal through a bridging loan, which will be refinanced through a rights issue and long-term debt.

The rights issue of at least 2.2 billion Swiss francs is fully secured by a combination of underwriting by a bank consortium as well as commitments from the two Singapore state-owned funds and the Qatar Investment Authority (QIA). The QIA has also committed to investing 450 million Swiss francs.

Dufry will detail the terms of the rights issue before a general shareholder meeting, to be held by May 15, to approve the equity financing. AGENCIES