CHINA. In major breaking news, Shanghai International Airport Co announced on Friday that it will partner with Shanghai Airport Investment Co in a joint venture that will acquire 32% of issued shares in Hong Kong company Uni-Champion International Limited, a shareholder in Sunrise Duty Free businesses.
The new JV will also acquire a 12.48% equity interest in CDF Sunrise Internet Technology Co from Tianjin Boyu.
Uni-Champion’s assets include 49% stakes in Sunrise Shanghai, Sunrise China, CDF Beijing, and CDFG Daxing (the 51% balance is held by China Duty Free Group).
After the acquisition, the joint venture will own 15.68% equity of Sunrise Duty Free (Shanghai) Co Ltd; Sunrise Duty Free (China) Co Ltd; China Duty Free Group Beijing Capital Airport Duty Free Co Ltd; and China Duty Free Group Beijing Daxing International Airport Duty Free Co Ltd.
Those core assets are mainly engaged in offline duty free business at Shanghai Hongqiao International Airport, Shanghai Pudong International Airport, Beijing Capital Airport and Beijing Daxing Airport, plus downtown duty free operations in Shanghai and Beijing, and online bonded goods business.
The total investment (including setting up the JV and the acquisitions) is RMB1.698 billion (US$252.5 million). Shanghai Airport will account 80% of the capital contribution.
Explaining the rationale behind the deal, Shanghai Airport said: “In order to enhance the company’s competitive advantage in the non-aviation business segment and actively respond to the development trend of the domestic duty free sector, the company decided to enter into an agreement with the Investment Company and set up a JV and its Hong Kong subsidiary. We will use the Hong Kong subsidiary to acquire 32.0% of the issued shares of Uni-Champion held by Phoenix Dawn.
“After the completion of this transaction, Shanghai Airport will further leverage the synergistic effect with the target company’s core assets, build a distinctive brand of Shanghai Airport through the layout of offline duty free sales and online bonded import sales, and realise the further development of ‘Airport + Duty Free’.
“The purchase price is low, and a major opportunity has been seized at the right time,” noted Hangzhou-based Zheshang Securities Co of the deal.
“The ‘Airport + Duty Free’ collaboration greatly enhances the ability to resist risks… Shanghai Airport has changed from an owner to an owner + operator.
“Previously, the market’s concerns about the so-called diversion [of its offline duty free business] from online direct mail at and downtown duty free is largely alleviated. To a certain extent, it solves the risk that the Shanghai Airport business is too concentrated in offline airport duty free shops.” ✈
