Dufry Explores Combining With Benettons’ Autogrill

(Bloomberg) -- Dufry AG, the world’s biggest duty-free operator, and the Benetton family’s Autogrill SpA are exploring a potential combination that would create a new global leader in travel retail, people familiar with the matter said.

Under one potential structure being discussed, Dufry would purchase Autogrill and pay in stock, according to the people, asking not to be identified as the talks are private. A deal would unite companies with a combined market value of $6.6 billion at current levels. 

The Italian company said “it is interested in exploring various strategic options, and to this end it is having talks also with sector participants to further promote the development of Autogrill and create value for all stakeholders,” according to a statement. Dufry declined to comment. 

Shares in Autogrill rose 12% in Milan trading, the most since November 2020. Dufry shares rose 1.6% in Zurich, after earlier gaining as much as  jumped as much as 5.6%. 

Italy’s billionaire Benetton clan would become the biggest single investor in the combined listed entity with a stake of about 20%, the people said. Deliberations are at an early stage, and there’s no certainty they will lead to a transaction, the people said. 

While the pandemic has battered the travel industry at large, some segments have recovered more quickly than others. The resulting valuation gap between Basel-based Dufry and Autogrill, which specializes in operating highway and airport restaurants, is a key part of the discussions, according to the people.

“Travel retail has been historically a consolidating industry and Dufry has largely grown through acquisitions,” said Jelena Sokolova, analyst at Morningstar. “It makes sense for travel retail players to gain scale with suppliers and operationally to be able to afford increasing airport fees and bid for contracts more competitively than small, subscale peers.” 

Pandemic Shift

Autogrill minority investors could also be offered cash as an alternative to Dufry shares, the people said. The Benettons took over Autogrill in 1995 and own 50.1% of the company.

Dufry has lost about a third of its value in the past year amid pandemic-related travel disruptions, giving it a market capitalization of about 3.7 billion Swiss francs ($3.9 billion). Autogrill, valued at about 2.8 billion euros ($3 billion), has gained about 21% over the same period, including today, as business at highway restaurants rebounded more quickly than duty free. 

The companies have been holding discussions on a potential deal in recent months, following several informal approaches over the past few years, the people said. Autogrill and Dufry have also been evaluating other potential options for mergers and acquisitions, the people said.

Reshaping Fortune

After making their fortune in the textile industry more than 50 years ago, the Treviso, Italy-based Benettons began diversifying in the 1990s, notably with a string of investments in highway and airport operators and concessionaires. 

This year the family has begun reshaping its 11 billion-euro investment company Edizione SpA under the leadership of recently named chairman Alessandro Benetton. The Benettons earlier this month announced a plan to buy out minority shareholders in infrastructure giant Atlantia SpA in order to take it private. 

The shakeup at the holding company began in the wake of the deadly 2018 bridge collapse in Genoa, on a section of road managed by the family’s Autostrade per l’Italia SpA. The Benettons eventually sold Autostrade to end a standoff with the government over the bridge disaster. 

In addition to its infrastructure holdings, the Benettons -- who still own their struggling namesake retail brand -- hold a range of stakes in the finance industry, including about 4% of insurer Assicurazioni Generali SpA.  

©2022 Bloomberg L.P.