Dufry AG (DUFN.S) has fleshed out plans for its takeover of Italy's World Duty Free SpA (WDF) (WDF.MI), as the Swiss company seeks to consolidate its position as the biggest player in the fast-growing airport retail sector.
Dufry said on Monday it expects to raise at least 2.1 billion euros ($2.3 billion) through a rights issue of new stock and up to 1.5 billion via long-term debt instruments, adding the plan had the backing of major investors.
The combined Dufry-WDF will have a market share of 25 percent and projected annual sales of $9 billion, cementing Basel-based Dufry's position as the world's biggest player in the fast-growing sector. WDF operates 495 stores in 98 airports including London's Heathrow and Gatwick.
Retail spending at airports is expected to almost double to $59 billion in 2019 from the 2014 level, analysts predict, driven by rapid growth in Asia where more than 350 new airports are set to be built in the next eight years.
Dufry shares were up 4.5 percent at 141.50 francs by 0951 GMT, their biggest daily rise since October. WDF shares were down 8.1 percent at 10.07 euros.
However some analysts noted Dufry was taking on a lot given its purchase last year of Nuance Group for $1.7 billion.
"Although we fully understand the long-term industrial logic behind the WDF transaction ... we see several risks in the short term, as Dufry is in the middle of the integration of Nuance (till end of full-year 2015) and WDF just has started the integration of its EU platforms," Vontobel analyst Rene Weber, who has a "buy" rating on Dufry shares, wrote in a note.
Edizione, the holding company owned by the Benetton family that controls WDF, said at the weekend it had agreed to sell its 50.1 percent stake to Dufry for 10.25 euros per share. Dufry will then make a mandatory bid for the remaining shares.
Qatar Investment Authority, Government of Singapore Investment Corp (GIC) [GIC.UL] and investment firm Temasek Holdings [TEM.UL] have each committed to buying up to 450 million Swiss francs ($468 million) worth of the new shares.
Dufry expects to detail the exact terms of the rights issue before a general shareholder meeting, to be held by May 15, to approve the equity financing.
It hopes to generate up to 100 million euros in synergies or cost savings through the purchase.
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