Swiss travel retailer Dufry to buy rival Nuance Group for $1.73 bn

Switzerland-based travel retailer Dufry AG today struck a deal to buy its rival Nuance Group for 1.55 billion Swiss francs ($1.73 billion) in order  to become a leader in the global duty free and travel retail market.

Dufry expects to fund the acquisition through a committed bridge financing, which will be refinanced by equity financing of approximately CHF 1 billion and through debt capital markets for an amount of at least CHF 550 million.

As for the equity increase, Dufry intends to go in for a rights issue and will seek shareholders approval for an ordinary capital increase.

Dufry's shareholder group led by Travel Retail Investments, which holds a 22.2-per cent stake, has committed to vote in favour of the capital increase and intends to participate in the equity increase.

European private equity firm Pai Partners had acquired a 50-per cent stake in Nuance in 2011 from Italian group Stefanel SpA for €106 million. GECOS SpA, a major Italian food retail group holds the remaining 50 per cent.

Nuance operates over 300 duty free shops across more than 50 airports in 67 locations in 20 countries and territories across the globe.

Apart from duty and tax-free stores, brand boutiques and concept stores, the Zurich-based company also provides in-flight services and operates a wholesale and distribution business, supporting the travel retail sector.

Nuance holds an attractive portfolio in Europe, Asia and North America. In Europe, Nuance operates sizeable retail operations in Switzerland and Turkey as well as attractive businesses in Portugal, Malta, the UK and Sweden. In Asia Pacific, Nuance has a presence in mainland China, Hong Kong, Macau, India and Australia and holds strong positions in the US and Canada.

Over 90 per cent of its CHF 2.1 billion sales are generated from the airport retail channel, with a majority in the high margin, core duty free categories of perfumes and cosmetics, liquor and tobacco.

Dufry said that the geographic presence of Nuance is complementary and strengthens its positions in strategic key markets in the Mediterranean, North and Central Europe, Asia and the US and Canada.

The acquisition will lead to Dufry emerging with a leading position in the Mediterranean in addition to its existing leadership positions in Latin America, Caribbean and North America, and strengthen its diversified business in Asia.

Combining Dufry and Nuance will confirm Dufry as the global leader in the airport retail industry reaching 15 per cent of worldwide market share with presence, close to 1,750 shops at 239 airports in 63 countries.

Dufry expects to generate cost synergies starting in 2015 around CHF 70 million and pre-tax integration cost of around CHF 20 million in 2014 and CHF 10 million in 2015.

Founded in 1865, Dufry is a global travel retailer with operations in 48 countries. The Basel-based company operates more than 1350 shops located at airports, cruise liners, seaports, and other touristic locations.