Alibaba to Buy Up to 10% Stake in Duty-Free Retailer Dufry
Comment of the Day

October 05 2020

Commentary by Eoin Treacy

Alibaba to Buy Up to 10% Stake in Duty-Free Retailer Dufry

This article by Thomas Mulier for Bloomberg may be of interest to subscribers. Here is a section:

Alibaba Group Holding Ltd. agreed to buy as much as a 9.99% stake in Dufry AG, giving the Swiss duty-free giant a lifeline as the pandemic hammers the business.

Dufry said Monday it’s proposing a capital increase that will raise up to 700 million Swiss francs ($763 million), and Alibaba will participate. Advent International Corp., a private equity company, also plans to invest as much as 455 million francs. Dufry shares surged as much as 16%.

The Swiss company said the proceeds from the share sale will help it buy out its Hudson Ltd. U.S. unit, as previously announced.

The capital increase will bolster the company, whose market value has dropped to 1.6 billion francs as the shares trade near the lowest in a decade. The companies are also forming a joint venture in China that will combine Alibaba’s digital capabilities and network with Dufry’s travel retail business in that market.

Eoin Treacy's view

The absence of airline traffic gutted Dufry’s business model. That’s a condition which has been shared by every business leveraged to travel and tourism. The big question is how long air travel will take to recover. I remain of the opinion we are close to the peak of coronavirus hysteria. That suggests it can only get better from here.

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