China's HNA continues buying spree, purchases 17% stake in Swiss duty-free operator Dufry

Dufry, which opened continental Europe's first duty-free shop in 1952 in Paris, has become the world's largest travel-retail company.
Dufry, which opened continental Europe's first duty-free shop in 1952 in Paris, has become the world's largest travel-retail company. PHOTO: REUTERS

ZURICH (BLOOMBERG, REUTERS, AFP) - Chinese conglomerate HNA has agreed to purchase 16.8 per cent of Swiss duty-free stores operator Dufry, a stake with a market value of about 1.44 billion Swiss francs (S$2.08 billion).

HNA purchased stakes from Singapore's sovereign wealth fund, GIC, and investment company Temasek Holdings, according to an exchange filing. The purchase price, based on market conditions, is a "low double digit premium," according to the filing.

HNA's stake would give it access to the world's largest travel retail operator's global retail network with 2,200 shops at airports, sea hubs and tourist locations from Las Vegas to Milan.

HNA, which operates over 2,000 hotels globally and 16 airports in China, has been acquiring travel-related businesses as rising incomes fuel a boom in Chinese tourism.

On Monday, it agreed to buy a stake in Rio de Janeiro's airport from the corruption-tainted Brazilian firm Odebrecht, a government official said. HNA will take over from Odebrecht as the joint holder of a controlling stake in Tom Jobim airport, Brazil's second busiest air hub with some 17 million passengers a year.

It will hold US$8 billion (S$11.14 billion) stake in the airport as one half of a consortium along with Singaporean firm Changi Airports International.

"HNA is building a travel and leisure giant, focused on Chinese travelers, and Dufry would fit into that portfolio perfectly," said Jon Cox, head of European consumer equities at Kepler Cheuvreux. "It will probably also take a look at trying to open up the the mainland China market for duty free, which is currently controlled by local companies."

Dufry shares were up 0.5 per cent in early trading in Zurich.

HNA, led by billionaire Chen Feng, has been on an acquisition spree over the past year. The company has grown out of Hainan Airlines and has diversified into insurance, ship repairs and logistics.

Recent HNA investments include a US$1 billion deal for Singapore-based logistics provider CWT, a 25 per cent stake in hotel operator Hilton Worldwide Holdings, a US$6.1 billion deal for all shares of information technology hardware and software distributor Ingram Micro and asset manager SkyBridge Capital.

HNA's overseas push stands out at a time when regulators in China are making it increasingly difficult for Chinese companies to take money out of the country.

Dufry, which opened continental Europe's first duty-free shop in 1952 in Paris, has become the world's largest travel-retail company. Chief executive officer Julian Diaz Gonzalez has led a series of takeovers of rivals including World Duty Free in past years.

GIC and investment firm Temasek together with the Qatar Investment Authority each committed as much as 450 million francs to help fund Dufry's acquisition of Italian rival World Duty Free in 2015.

Temasek owns 8.6 per cent of Dufry, GIC 7.8 per cent and QIA 6.9 per cent, according to the Dufry's annual report.