SOUTH KOREA/USA. Hotel Shilla, owner of The Shilla Duty Free, said today that is to acquire a 44% stake in leading inflight duty free specialist The DFASS Group for US$105 million.
The deal will be handled through Shilla Travel Retail Group LLC, a division of Hotel Shilla, which in turn is owned by the Samsung Group.
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“The investment is consistent with our strategy of profitable growth and diversification of the duty free business, the largest segment of Shilla’s business.“ |
Boojin Lee President and CEO Hotel Shilla |
Shilla told investors that it retained a call option to buy an additional 36% of DFASS in five years.
In a statement the companies said: “The Hotel Shilla and DFASS Group have agreed to enter into a broad strategic partnership to become a global leader in travel retail.
“Shilla will acquire a 44% stake in DFASS and collaborate to develop new and existing duty free concessions, expand inflight concession services and strengthen distribution agreements with brand owners.
“The acquisition allows Shilla to significantly expand its global footprint and capabilities in the United States, Latin America, the Caribbean, Africa, the Middle East and Southeast Asia, as well as diversifying its business to include master distributor agreements.”
The two companies said they would integrate key functions across their global concessions and supply chains, including purchasing and certain administration functions, to “generate synergies and enhance gross margins”.
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“Both of our companies have unique skill sets and capabilities, and the combination of these will maximize our existing businesses and provide a formidable development vehicle for the future.“ |
Benny Klepach Founder & President DFASS |
The partnership, they added, also provides a strong platform to jointly develop new concessions in target markets, as well as to expand the scope of existing concessions.
Shilla President and CEO Boojin Lee said: “The investment is consistent with our strategy of profitable growth and diversification of the duty free business, the largest segment of Shilla’s business. The strategic partnership will enable both companies to diversify the value chain through business collaboration and generate synergies to enhance overall revenue and profitability.
“The alliance will also strengthen each company’s concession portfolio, inflight retail business, airport retail and distribution agreements with brand owners. We are excited about the partnership that will lead to greater opportunities, especially on the back of the recent concession extension at Incheon Airport.”
Benny Klepach, Chairman and CEO of DFASS, added: “I’m personally delighted to be working with Shilla. Both of our companies have unique skill sets and capabilities, and the combination of these will maximize our existing businesses and provide a formidable development vehicle for the future.”
As the second largest travel retailer in Korea, The Shilla Duty Free currently operates five shops in its home country – in downtown Seoul, downtown Jeju, Incheon International Airport, Gimpo International Airport and Daegu International Airport – and two shops overseas, at Singapore Changi and Macau International Airport.
Founded in 1987 and based in Florida, DFASS is the world’s largest inflight duty free retailer supplying duty free goods to over 30 carriers.
It also operates over 35 duty free/duty paid shops across the USA, Latin America and the Caribbean. DFASS also has distribution agreements with brand owners for liquor, beauty and watches.
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The Shilla Duty Free was the world’s eighth biggest travel retailer (duty free and duty paid) by turnover in 2013, and DFASS was 20th, according to The Moodie Report’s ranking of the world’s top 25 travel retailers |
