US/SWITZERLAND. In major breaking news, Dufry and Hudson announced today that they have entered into a definitive agreement for Dufry to acquire all the equity interests in Hudson it does not already own. The price is US$7.70 in cash per Hudson Class A share.
Upon completion of the transaction Hudson will be delisted from the New York Stock Exchange. The news and convenience retailer will become an indirect wholly owned subsidiary of Dufry.
Dufry will increase its equity ownership position in Hudson from 57.4% to 100% following completion.
The delisting of Hudson is part of Dufry’s current re-organisation and is intended to further simplify its corporate structure and align its operations to the new [COVID-19-driven] business environment, the travel retail giant said.
Dufry expects to realise annual cost savings of at least CHF20 million (US$22.15 million), thereby further supporting a set of already announced cost-saving measures, and to improve cash flows going forward.
Dufry intends to finance the proposed transaction through an equity capital increase by way of a rights issue upon approval of shareholders at an Extraordinary General Meeting. The transaction has been fully underwritten by a bank consortium.
The deal has been unanimously approved and recommended by the Board of Directors of Dufry and a special committee of independent directors of Hudson, as well as the Board of Directors of Hudson.
Dufry CEO Julián Díaz commented: “The delisting of Hudson is an important part of our re-organisation. It is expected to allow Dufry to realise considerable cost savings, both through synergies generated by simplifying our organisational structure and operating processes as well as by eliminating the costs and complexities of the separate listing.
“The stronger integration will further accelerate the decision-making process by adding more flexibility and efficiency to our business.
“The delisting of Hudson emphasises the strategic importance of the North American business for the overall Dufry Group and the integration of the duty free and duty paid businesses globally, with the Hudson convenience stores being an established brand across our operations worldwide. We will continue with the successful execution of our strategy for the North American travel retail market, which focusses on operating duty free and duty paid convenience shops, as well as the further penetration of the food & beverage market.
“The closer alignment with headquarters and with other global operations will support the North American business during the recovery period, and the fast implementation of the full re-organisation will help Dufry to focus the business on the reopening and growth acceleration.”
Strategic rationale and financial highlights
Dufry said that the delisting and full reintegration of Hudson is expected to further reduce operating complexity, simplify governance and unlock synergies, while also eliminating costs associated with Hudson’s separate listing at the New York Stock Exchange and related regulatory requirements. The latter are no longer justified in light of Hudson’s limited trading liquidity and the changed business environment due to the COVID-19 pandemic, Dufry commented.
Dufry said: “Hudson’s ability to implement its current strategy will not be impacted by the delisting, which is expected to strengthen both Dufry’s and Hudson’s position in the changed business environment, and will reinforce the Group’s competitive positioning in the longer term.”
Other key points:
- The transaction will be structured as a merger, subject to the laws of Bermuda, whereby Hudson will be merged with a wholly owned, Bermuda-incorporated subsidiary of Dufry, with Hudson surviving the merger as an indirect wholly owned subsidiary of Dufry.
- The transaction is expected to close in the fourth quarter of 2020, and is subject to the approval by the holders of a majority of Hudson’s outstanding common shares present at a shareholder meeting of Hudson to be convened in due course.
- The transaction is conditioned upon the successful completion of the rights offering by Dufry resulting in net proceeds sufficient to finance the deal, the requisite lender consent under Dufry’s existing multicurrency term and revolving credit facilities, as well as other customary closing conditions.
More details and analysis to follow soon.
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