CHINA. Sunrise Duty Free China’s successful bid for the Beijing Capital International Airport Terminal 3 duty free concession has cleared the way for China Duty Free Group (CDFG) to finalise its previously conditional 51% acquisition of Sunrise’s Beijing operation.
As revealed worldwide by The Moodie Davitt Report today, Sunrise Duty Free China was awarded the T3 duty free contract while CDFG snapped up the T2 concession. Both run for eight years. Until now Sunrise has been the sole incumbent of the duty free concessions in both departures and arrivals. The awards will be duly authorised provided there is no protest within the next few days.
If the awards are ratified, as expected, then CDFG will close its previously conditional 51% acquisition of Sunrise Duty Free China revealed earlier this year. It has done that by buying (initially on a conditional basis) the full 50% stake in Sunrise Duty Free China held by Sunrise Shanghai and a further 1% from the 50% holding of Sunrise Duty Free Group.
CDFG President Charles Chen* confirmed to The Moodie Davitt Report that the 51% acquisition now falls into place. He said he was “delighted” with the outcome.
“This is the biggest news in the Chinese duty free market in the last 18 years,” said Jason Cao, Publisher of Chinese language title Duty Free Expert, which works closely with The Moodie Davitt Report. Duty Free Expert broke the original story of the conditional CDFG/Sunrise deal in March, ahead of all western media.
However, as revealed by The Moodie Davitt Report, CDFG parent company China International Travel Service Corporation (CITS) was forced to make an explanatory statement to the market in March, noting that the acquisition had not been finalised. CITS said at the time: “The cooperation matter is pending for internal and external decision-making and approval procedures by related parties, and subject to whether CDFG becomes a winner in the [Beijing] bidding project.”
Now that CDFG has (subject to finalisation) won the T2 contract and Sunrise Duty Free China has secured the T3 concession, the acquisition is set to conclude, CITS said today in a further clarifying statement to the stock market. “The transaction does not constitute a major asset restructuring,” it said, adding, “There is no significant legal obstacle in the implementation of the transaction.”
Provided all goes to plan in coming days, CDFG will hold not only full control of Beijing Capital International Airport T2 duty free, but also hold a 51% interest in the T3 operation and Sunrise’s operations in Shanghai. That is mighty good news for the Chinese state-owned giant, especially as it follows soon after CDFG’s success in winning the Hong Kong International Airport liquor, tobacco and gourmet foods concession in partnership with Lagardère Travel Retail.
*Footnote: CDFG President Charles Chen will deliver a major speech at this year’s Trinity Forum in Bangkok (1-3 November).
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