SWITZERLAND/US. Dufry yesterday closed the merger agreement with North American specialist travel retailer Hudson Group Holdings following receipt of required regulatory approvals.
As planned when the merger was announed on 3 September, the execution consisted of a share swap and the refinancing of Hudson’s debt.
As consideration for the equity of Hudson, Dufry issued 4,218,750 new shares from its authorized capital as well as mandatory convertible notes (MCN), which will be converted into 932,704 new Dufry shares on 9 December, 2008.
Both, the new shares as well as the MCN will be provided to Hudson’s current shareholders in exchange for 88.8% of Hudson’s share capital, which has been valued at US$396 million.
The number of Dufry shares to be issued were fixed at the time of announcement on 3 September, 2008 and are based on a share price of the Dufry AG share of CHF85.0.
[Editor’s note: Dufry shares have been hard hit in recent weeks by the troubled financial markets, despite the company continuing to trade solidly and profitably. They closed at 31.20 yesterday on the Swiss Stock Exchange, down -12.24%, reversing sharp gains earlier in the week. On 10 October its shares hit a 52-week low of 25.00, compared with a 52-week high of 132.00 reached on 19 October 2007. Dufry shares have fallen -48.85% over the past four weeks. Like other travel retail-linked stocks in The Moodie Reportfolio, a basket of 12 industry stocks, that have fallen in recent weeks, Dufry’s share value has been impacted by negative investor sentiment generally in the face of the economic crisis, and specific concerns over the travel sector.]
As planned when the merger with Hudson Group was announced in September, Dufry has assumed Hudson’s debt of approximately US$390 million as part of the transaction.
In this respect, Dufry said it has entered into a new five-year committed syndicated facility of approximately CHF1,250 million (US$1.1 billion), which has been fully underwritten by Banco Santander, BNP Paribas, ING, Raiffeisen Zentralbank, and Royal Bank of Scotland. The facility has been used to refinance Hudson’s debt as well as Dufry’s existing bank debt.
Hudson Group is a leading travel retailer in North America with 540 duty paid stores in 70 airports and transportation terminals throughout the US and Canada. In 2007, Hudson generated a turnover of USD$666 million and EBITDA of US$85 million, resulting in an EBITDA margin of 12.8%.
Dufry said the transaction will further reinforce its leading global position in travel retail and strengthen its presence in the duty paid segment of the industry.
The combined group will operate around 1,000 shops at 137 airports with a 2007 pro forma combined turnover of approximately CHF2.6 billion (US$2.3 billion).
Dufry and Hudson have appointed a joint integration team to focus on the combination and to realise synergies of approximately CHF20 million (US$17.5 million) within two years.
The group also announced today that Dufry and Hudson will begin the international roll-out of the Hudson business model, which it said will result in additional top-line and profitability growth on top of the synergies mentioned.
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