The Financial Times published a letter from Edizione General Manager Carlo Bertazzo last week (May 14) relating to the company’s ongoing sale of its controlling 50.1% World Duty Free stake to Dufry, in which the Edizione/Benetton Group claims the offer made by another bidder – the Chinese company Boyu Capital – was conditional.

 

This followed the earlier complaint to the Italian Consob regulator by a minority shareholder that the Benetton Group had allegedly rejected a higher offer per share of €12.30 ($13.70) for the World Duty Free Group. This compared with the €10.25 ($11.42) offer from Dufry, which currently looks to have secured the deal for the Swiss-based leading DF&TR operator.

 

[Click here for background: http://www.trbusiness.com/regional-news/international/complaint-to-italian-regulator-on-wdf-sale-4/76299].

 

In its story covering the aforementioned complaint to the regulator (‘Italy urged to investigate World Duty Free auction’, May 11), the Financial Times significantly cites a representative of the Chinese Boyu company confirming that conditions presented in its offer were no different from those in the winning offer.

 

 

However, Edizione has strongly countered this and defended its decision to select the Dufry bid, arguing that the Chinese company’s offer was conditional on gaining prior agreement from five important airports currently working within the World Duty Free portfolio.  The Edizione letter contains the claim that together, these account for around 40% of sales and 50% of WDF’s earnings. [To comply with the FT’s copyright request, TRBusiness has not included a link to Edizione’s letter-Ed].

 

ROUTINE EXAMINATION…

Italy’s regulator is now said to be routinely examining the deal relating to the majority ownership sale of one listed company to another – including any competitive implications – although there is still no indication of where the complaint to Consob originated.

 

As reported earlier by TRBusiness, the Boyu company bought a majority stake in Sunrise Duty Free in 2011 from Fred Kiang, the Chinese-American businessman who pioneered the duty free concessions at both Beijing Capital and Shanghai Pudong airports which Sunrise runs to this day. [Kiang gave his last major public interview to TRBusiness just prior to this sale-Ed].

 

 

As already stated, Boyu/Sunrise’s alleged interest in buying a majority stake in World Duty Free certainly makes sense. Sunrise’s duty free contract at Beijing International Airport is due to expire at the end of this year and Boyu has an impressive private equity record as a company that buys, builds and then sells companies.

 

Having said that, very knowledgeable sources in both Mainland China and outside tell TRBusiness that Boyu/Sunrise continues to be ‘very well connected’, with many believing its duty free contract will most likely be renewed.

 

For its part, Beijing Airport originally signed a 10-year contract with Sunrise from 2006 to the end of 2015 to operate duty free shops and boutiques in T2 and T3. Significantly, Beijing and Shanghai are the only ‘airport facilities’ in China that are allowed to offer duty free arrivals shops.