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Beijing headquartered travel retail operator, China Tourism Group Duty Free (CTG Duty-Free), has struck an agreement with DFS to acquire its travel retail business in Hong Kong and Macau, as well as its intangible assets in Greater China.

Through this transaction, CTG Duty-Free will acquire DFS’ retail stores in Hong Kong and Macau (excluding the City of Dreams store in Macau), in addition to intangible assets encompassing a series of DFS brands and intellectual properties for exclusive use in Greater China.

According to a statement issued today by DFS, which is owned by LVMH and DFS’ co-founder and shareholder Robert Miller, CTG Duty-Free will conduct the acquisition through its wholly owned subsidiary, China Duty Free International Limited, with the proceeds to be paid in cash.

Following the transaction, DFS will continue to operate its other luxury travel retail operations worldwide.

“This move will further expand CTG Duty-Free’s service network across the Greater Bay Area, aiming to build a platform for promoting China-chic brands globally and establish an international business mid-platform,” said Luke Chang, Executive Director and President of CTG Duty-Free.

“CTG Duty-Free remains committed to providing high-quality travel retail experiences to both domestic and international tourists, fulfilling its responsibility as a central state-owned enterprise-controlled listed company to support the high-quality development of the retail economy in Hong Kong and Macau.

“Executed under the leadership of its parent company, China Tourism Group, this represents a significant step in accelerating CTG Duty-Free’s international business layout and actively implementing the Greater Bay Area Strategy and the ‘China-chic Brands Going Global’ Strategy.”

In a complementary move, LVMH and the Miller Family will participate in a capital increase of CTG Duty-Free by subscribing to newly issued H-shares listed in Hong Kong.

The subscription amount represents a small part of their proceeds, and the subscription will be made upon completion of the transaction, according to the DFS-issued statement, which also relayed that CTG Duty-Free and LVMH have also entered into a ‘memorandum of understanding pursuant to which both parties aim to set up a strategic cooperation notably in the retail sector where the strategies of both parties are aligned and in line with the current business model of the LVMH Maisons’.

This cooperation will offer CTG Duty-Free and LVMH opportunities to ‘leverage their respective strengths and forge further collaborations in Greater China to achieve mutual benefits’, such as in the areas of product sales, store establishment, brand promotion, cultural communication, travel services and customer experience.

“The sale of our Hong Kong and Macau stores marks an important step for DFS. DFS’ well-established presence and operational excellence in Hong Kong and Macau is an achievement we take great pride in,” commented Ed Brennan, Chairman and CEO of DFS.

“The DFS shopping experience will be carried forward and enhanced by the new skills and perspectives that CTG Duty-Free will bring. We are proud of our journey in this region and grateful to everyone who has been a part of it.”

Michael Schriver, President of LVMH for North Asia added: “For decades, DFS has played a pivotal role in shaping Hong Kong and Macau into premier destinations for travel retail. As we look to the future, we consider China Tourism Group Duty Free to be the ideal partner to operate the DFS business in Hong Kong and Macau and to lead it into its next chapter, thanks to their expertise and proven track record in travel retail. This whole operation underscores our confidence in the long-term potential of the Chinese market.”

The completion of the transaction remains subject to customary closing conditions and is expected to close in around two months.

The China business acquisition news follows that of DFS confirming earlier this month that it is exiting Hawaii with the phased closure of its Waikiki downtown store, Honolulu International Airport shop, and the ending of its lease at Kahului Airport. The move follows a series of strategic closures by the Group.

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