UK. Italian travel caterer-to-retailer Autogrill has won the race to buy BAA retail subsidiary World Duty Free, The Moodie Report understands reliably tonight.
An announcement is expected early tomorrow [Monday] from Ferrovial-controlled BAA.
[UPDATE MONDAY 07.30 LONDON TIME: BAA this morning confirmed the sale World Duty Free Europe Limited to Autogrill S.p.A. for £546.6 million (US$1.1 billion). Click here for a comprehensive update.]
Autogrill, 50% (soon to be 100%) stakeholder in Spanish travel retailer Aldeasa and owner of HMSHost and Alpha Group, beat off intense competition from Dufry and Aelia owner Lagardère Services.
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Autogrill underlines the strength of its ambition |
[FURTHER UPDATE MONDAY 07.30 LONDON TIME: Imperial Tobacco this morning announced the sale of its 49.95% shareholding in Aldeasa to Autogrill. Imperial Tobacco’s stake is to be sold for a total cash consideration of €275 million. This represents an enterprise value (including Imperial Tobacco’s share of Aldeasa’s net debt) of around €355 million for Imperial Tobacco’s 49.95% share of Aldeasa, and a 2007 EV/EBITDA multiple of 9.2x.
For our latest update on the Imperial/Aldeasa story click here. The transaction is conditional on approval from the European Commission, and Imperial Tobacco expects that it will be completed by May 2008.]
Commenting on the two deals, Autogrill Chairman Gilberto Benetton said: “These transactions are a further milestone in the growth of the Group that started with the privatisation. In 1995 Autogrill was an Italian food & beverage motorway company with sales of approximately €800 million. Today our Group is the global service provider for travellers with a presence in 42 countries and sales of approximately €6 billion. We are proud to have achieved such an impressive result”.
As we have commented many times during the past few months, Autogrill was always the front-runner to win the World Duty Free contest because of the available synergies between Aldeasa, World Duty Free and Alpha Group. Much interest will now centre on how the various parts are integrated into this powerful new travel retail ‘supergroup’.
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“In 1995 Autogrill was an Italian food & beverage motorway company with sales of €800 million. Today it is the global service provider for travellers with a presence in 42 countries and sales of €6 billion“ |
Gilberto Benetton Chairman Autogrill |
The price will come as a suprise to many given the current credit crunch (which eliminated all but one private equity player) and the financial pressures on Ferrovial caused by its heavy debt burden arising out of the BAA acquisition. But as we reported last week, the sheer competitiveness of the auction for such a valued prize kept interest bubbling right to the end.
Last November we wrote: “When rumblings of a potential World Duty Free sale began mid-year, a price tag of £500 million (US$1.03 billion) was being freely bandied about. That now looks shy of Ferrovial’s realistic target.
“World Duty Free is well-managed and particularly well-respected among the supplier community. Additionally, the likelihood of a package of long-term contracts at airports that have shown solid, consistent retail growth despite difficult circumstances in recent years, means the final number may go significantly higher.
“If, as some sources believe, BAA encourages a maximum capital sum upfront and a lower concession percentage going forward, then we could be talking a very big number indeed – certainly well north of the £500 million ball-park suggested earlier.”
North is indeed the direction that the final price has taken. That will be welcome news to Ferrovial, putting a hefty dent in its debt burden incurred by the 2006 takeover of BAA (Ferrovial leads Airport Development and Investment, which acquired the UK airports company for £16 billion, including debts, in July 2006).
The Spanish infrastructure group had intended initially to refinance those borrowings quickly but it has been hit by a host of factors including enhanced security costs and the recent credit crunch. Its plans to secure BAA’s debt against the seven airports have also been delayed by a UK regulatory review of landing charges (the results of which are due tomorrow) which threatens cashflow, and a possible forced break-up of the BAA portfolio by the Competition Commission.
The World Duty Free deal gives Autogrill a 12-year concession to run the main duty free stores at Heathrow, Gatwick, Stansted and Southampton airports in England and Glasgow, Edinburgh and Aberdeen in Scotland.
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MORE STORIES ON THE SALE OF WORLD DUTY FREE
Decision imminent on World Duty Free as three front-runners fight it out – 06/03/08
Lagardère Services Chief Executive confirms offer for World Duty Free – 05/03/08
Crunch day for World Duty Free – 03/03/08
Autogrill secures €1 billion in financing to fund “˜potential acquisitions’ – 28/02/08
New debt and equity to finance Dufry’s bid for World Duty Free as deadline looms- 28/02/08
