CANADA. Autogrill Group, through its US subsidiary HMSHost Corporation, has agreed to buy the airport operations arm of Cara, a leading Canadian food & beverage services group.
The company will buy Cara’s Airport Terminal Restaurant Division (ATR), which operates travel concessions in North America, at an enterprise value of about C$62 million (US$55 million) – between six and seven times EBITDA. Closure of the deal, subject to anti-trust approval, is expected in the second half of 2006.
Under the terms of the agreement HMSHost (through its subsidiary, Host International of Canada) will acquire ATR contracts at nine airports: Calgary, Edmonton, Kamloops, Montréal, Ottawa, Saskatoon, Toronto, Vancouver and Winnipeg.
The ATR contracts, which cover 90 retail outlets, generate C$74 million (US$66 million) in sales and more than C$9 million (US$8 million) in EBITDA.
The main licensed brands include Sbarro’s, ToAst!, Second Cup and Tim Horton’s. The best known proprietary brands include Kelsey’s, Milestone’s, Swiss Chalet and Harvey’s.
HMSHost will enter three of Canada’s main airports – Ottawa, Edmonton and Winnipeg – which it said would generate “powerful synergy” with its existing operations in Calgary, Montréal, Toronto and Vancouver, bringing the total of its Canadian airports to ten.
“The agreement with Cara, one of Canada’s leading food & beverage operators, enables us to grow in airports and extend our brand portfolio,” said Autogrill Group CEO Gianmario Tondato Da Ruos.
Cara President and CEO Don Robinson commented: “Under the arrangement, in many cases the locations will continue to feature our great Cara brands which the traveling public enjoys. Host is a recognised leader in providing services to the traveling public, and has an excellent reputation and track-record with airport authorities across Canada. With Host being focused on this aspect of the business, it assures our teammates of continuing opportunities.”
With around 90 million passengers in 2005, 40% of them on international flights, Canadian airports are forecasting annual traffic increases in the medium to long term (until 2018) of +3-4%, in line with GDP growth. The biggest increases are expected in the three main airports of Toronto, Vancouver and Montréal.
HMSHost entered the Canadian market in 1994 with a contract to operate points-of-sale at Vancouver Airport. In 2005 HMSHost posted revenues in Canada of over US$145.1 million, of which 57.6% came from the airport channel. In October 2005 it partnered Aldeasa to secure a contract to operate duty free stores at Vancouver for eight years, with an option on a further two.
The business will start up in June 2007.
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