Dufry shares surge following HNA Group investment speculation

SWITZERLAND/CHINA. Dufry shares have risen sharply today on a Wall Street Journal report that Chinese travel-to-leisure conglomerate HNA Group is seeking to buy a stake in the world’s largest travel retailer.

Dufry’s shares jumped +4.0% following the report. By mid-afternoon Swiss time they were trading at CHF144.50 (+3.88%).

Approached by The Moodie Davitt Report, Dufry said it was unable to comment on media speculation about potential investors (we will bring you further analysis soon).

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The Wall Street Journal first reported the HNA Group investment story, citing sources familiar with the situation

Citing sources familiar with the plans, The Wall Street Journal reported that current Dufry investors including GIC and Temasek had been approached by HNA. It also cited the Qatar Investment Authority’s 6.92% stake.

HNA would become Dufry’s largest individual shareholder if it managed to buy the stakes of each of the three funds.

In Switzerland the take-over code does not trigger a mandatory offer for the whole company unless a stake larger than 33.33% changes hands, according to a reliable investment community source.  This would not be the case here, creating flexibility on pricing in an off-market purchase. HNA will be obliged to make a public disclosure if it acquires a holding over 3.0%.

Dufry shares
Dufry’s shares rose sharply following the HNA Group speculation
Source: Reuters
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List of Dufry shareholders, taken from its Annual Report 2016
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HNA Group is a privately owned Fortune Global 500 Corporation headquartered in Haikou, Hainan Island, China with operations in the aviation sector, infrastructure and real estate, financial services, tourism (including duty free retailing) and logistics.

It controls Haikou Meilan Airport Duty Free Shop, which offers highly successful offshore duty free shopping to Chinese travellers at Haikou Meilan International Airport on Hainan Island.

Intriguingly, and as reported, Hainan Duty Free also is set to form a joint venture with China Duty Free Group in what would be a blockbuster alliance. The registered share capital will be RMB100 million (US$14 million), with Hainan Duty Free contributing RMB51 million for a 51% share, and China Duty Free Group investing RMB49 million for the remaining 49% holding.

HNA Group was founded in 1993 and has nearly 180,000 employees worldwide.

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HNA Group is headquartered in Haikou, Hainan Island, China
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Through subsidiary activities HNA Group controls Haikou Meilan Airport Duty Free Shop, which offers offshore duty free shopping to Chinese travellers at Haikou Meilan International Airport on Hainan Island

On the acquisition trail

Chinese conglomerate HNA Group has been very active in recent times in making acquisitions across its fields of interest with aviation and aviation-related services central to the expansion. Here is a selected timeline of some of its main deals:

  • December 2016: As reported, HNA completes acquisition of gategroup, the Swiss inflight services provider, in a transaction valued at CHF1.4 billion (US$1.47 billion).
  • December 2016: Completes acquisition of IT products and services company Ingram Micro through subsidiary Tianjin Tianhai Investment Company. The all-cash transaction is for US$38.90 per share with an equity value of approximately US$6 billion.
  • December 2016: Closes deal to acquire Carlson Hotels through subsidiary HNA Tourism Group. Also acquires Carlson’s 51.3% stake in Brussels-based Rezidor Hotel Group.
  • October 2016: Announces intention to purchase a quarter of Hilton Worldwide Holdings Inc. for US$6.5 billion.
  • October 2016: Buys CIT Group’s aircraft leasing business for US$10 billion.
  • May 2016: Agrees to purchase 13% of Virgin Australia for US$114 million, with plans to raise that stake to about 20%.
  • March 2016: Increases stake in Deutsche Bank from 3.04% to 4.76%.
  • March 2016: Acquires Manhattan’s 245 Park Avenue skyscraper for US$2.21 billion.
  • November 2015: Agrees to buy 23.7% stake in Azul Brazilian Airlines for US$450 million through subsidiary Hainan Airlines.
  • July 2015: Agrees to buy airport luggage handler Swissport International from PAI Partners for US$2.81 billion.
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