INTERNATIONAL/NORTH AMERICA. Dufry is aiming to launch an initial public offering (IPO) of its North American business, including both duty free and duty paid travel retail, by the end of 2017.
CEO Julían Díaz told investors in a H1 results conference call that the company was looking to accelerate growth in the market by expanding its food & beverage operations through external acquisition.
He said the launch of the IPO reflects the different development of travel retail in North America compared to the rest of the world.
Díaz noted that while Dufry controls a significant part of the convenience market in North America, food & beverage makes up some 60% of the business there. Dufry is seeking to acquire a small-to-medium size company which will offer “know-how” of F&B operations that is “lacking internally”.
As reported, Dufry will retain a majority stake in the North America business and continue to fully consolidate it following the IPO. “The business would remain an important component of Dufry’s global diversification strategy, and its operations would remain integrated with Dufry Group across all major functions, allowing the North American business to continue to benefit from Dufry’s expertise and scale in the global travel retail industry,” Díaz explained.
He told investors that the company’s intention was to win more master concessionaire contracts in a similar way to its recent success at Chicago Midway International Airport. Wholly-owned subsidiary Hudson Group is part of the Midway Partnership, also comprised of F&B specialist SSP America and Vantage Airport Group, which is operating a new concessions programme at the airport.
Speaking about the IPO, Díaz said: “The new company with minority shareholders will be managed and operated in the same way as all Dufry businesses, as we seek to implement global efficiencies at the local level.
“The Midway Partnership was a new model for us, where in a master concessionaire contract we collaborate with a F&B company. The aim is to generate more value, have better control of operations, and crucially gain longer contracts.”
Dufry noted that proceeds from an IPO would be used initially to reduce leverage allowing the company to reach its target leverage ahead of time. The IPO would provide “better financial flexibility” for M&A opportunities, with Asia of particular interest.
Díaz also gave investors a brief update on HNA Group and its purchase of a stake in the travel retailer. Although unable to comment on specifics of a private transaction, he said that the two companies had started a “process of collaboration in different aspects of the business”. This includes creating a plan to “continue synergies” in the businesses, and discussions on how to manage and improve in the Asia market.