ASIA PACIFIC. Avolta has agreed a deal to acquire 100% of Hong Kong and Greater Bay Area border retailer Free Duty from NWS Holdings.
Avolta said the deal will see its positioning strengthened in the Asia Pacific region, gaining access to 150 million travellers and increasing regional sales by CHF250 million (US$295 million), the figure for estimated Free Duty sales in 2023.
Avolta said: “The deal considers current consumer behaviour in the region, a factor also reflected in the conditions, providing an appealing investment opportunity supported by the region’s expected profitable growth in the years ahead through a continuous increase in passenger numbers.”
Free Duty stores, it noted, will benefit from the recently announced tripling of duty-free allowances for mainland Chinese travellers returning from Hong Kong or Macau from RMB5,000 (US$710) to RMB15,000 (US$2,131).
The Free Duty acquisition will be entirely funded with cash from Avolta’s balance sheet with no equity or additional financing arrangements being required. The transaction is leverage neutral with no impact on the company’s deleveraging commitments.
Avolta CEO Xavier Rossinyol said: “Since launching our Destination 2027 strategy we have been consistent and deliberate in growing our business, both organically and through bolt-on M&A. Free Duty is a highly successful player in the Hong Kong travel retail market, and we are stepping in at the right moment at attractive terms with the seller changing their portfolio strategy.
“We are grateful to the NWS Holdings, as well as to rail operator MTR and the entire Free Duty team, for their vision and leadership, and their trust in Avolta to take Free Duty to the next level. The tireless efforts and dedication of our team, led in APAC by Freda Cheung, continue to be pivotal; thank you.”
Avolta President and CEO, Asia Pacific Freda Cheung said: “By entering into a deal for this strategic acquisition, we are more than doubling our PoS in Hong Kong, and, importantly, more than tripling our access to travellers – now at nearly 150 million each year.
“We are excited for the opportunity to build on this legacy and achieve new milestones together in a market that already shows opportunity, and further strengthen our relationship with local partners. The Free Duty deal strengthens our presence in this important region and underscores our commitment to excellence and innovation in delivering outstanding experiences to travellers. We look forward to the incredible opportunities ahead.”
NWS Holdings Group Co-Chief Executive Officer Gilbert Ho commented: “This transaction demonstrates NWS Group’s ongoing efforts in optimising its business portfolio and unlocking the value of our assets for our shareholders.
“As one of the world’s largest travel retail service providers, Avolta Group brings with it extensive retail experience and a vast sales network. We firmly believe that Avolta Group will bring in not only expertise and the highest standard of the industry, but will also offer growth opportunities for Free Duty and its team.
“We would like to extend our heartfelt gratitude to the Free Duty team for their contributions over the years, and we wish continued success for the business and the team.” ✈
