Shares of World Duty Free have been trading roughly +5% higher this week following the news on Tuesday night that the company was “pursuing business combinations with other operators” and that CEO José Maria Palencia would step down by the end of the year.

 

Markets welcomed the news on Wednesday with WDF shares in Milan spiking to €9.10 after closing at €8.415 on Tuesday – a hike of +8%. By lunchtime today the price had stabilised to around €8.835 which remains significantly up on Tuesday (see chart right).

 

The shares, however, are off their high of around €11 in January following the listing of the company last October after its demerger with Autogrill.

 

The board of WDF has said there will be a new impetus put on business development through both organic growth – and it has explicitly indicated the possibility of an acquisition, merger or joint venture with other operators.

 

That is not a new position. Last year, at WDF’s stock market listing (left), when TRBusiness asked Palencia about acquisitions, he replied: “Now we have another gear with our stock and our equity. We want to be a reference in this sector… if that means being an acquirer, why not?”

 

NEW MODEL

Details of how the company plans to move forward in the interim – while it looks for a new CEO – will likely be revealed on 2 October when the Board will meet to review WDF’s structure – with a new organisational model waiting in the wings.

 

The board will also discuss Palencia’s stepping down. For his part he has agreed to support the transition, although it is by no means certain that a new CEO will be found by the time he leaves.

 

Palencia’s departure comes as a result of differing opinions between the CEO and the board on how to implement WDF’s development strategy going forward.

 

The board believes that further integration of platforms in Europe, recovery of profitability in Spain and acceleration of the integration of its American travel retail business are the main steps to sustain growth, improve margins and lead to cash generation – and ultimately improve shareholder value.