The Swiss Series: Dufry joins forces with Alibaba

Swiss travel retailer Dufry and Chinese e-commerce titan Alibaba have agreed to form a Joint Venture in China to resist to the hard hit the business took this year.

Dufry, sounds familiar?

Founded in 1865 and having started their duty-free operations back in 1948, Dufry is the Switzerland-based company selling you perfumes, alcohol and cigarettes when you get out of the plane. They operate in 65 countries to serve travelers all around the world in airports, cruise lines, railway stations, seaports and other central tourist areas. Their headquarters are located in Basel and they have over 36’000 employees. The group has various own brands and also operates stores under renowned brand names.

Their general travel retail shops are the most common, selling items such as perfumes and cosmetics, food and confectionery, wine and spirits, watches and jewelry, fashion and leather, tobacco goods, souvenirs, electronics, books, magazines and many other products.

 

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Joint Venture news with Alibaba

According to a press release on October 5th, Dufry and Alibaba Group have agreed to form a Joint Venture in China. The Joint Venture will be owned 51% by Alibaba Group and 49% by Dufry. The Alibaba Group also plans an equity investment in Dufry with an ownership target of 9.99% after the deal is done. The partnership will bring together the travel retail expertise of Dufry with Alibaba’s leadership on the Chinese market. Dufry’s extraordinary General Meeting will take place on October 6th, where they will propose to issue 25 million shares, amounting to roughly CHF 700 million.

 

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Dufry has definitely suffered of the important decrease of travelers and hope to compensate by reinforcing their position on the Chinese market. “We expect this collaboration to drive growth in Asia and with Chinese customers worldwide with the support of new digital technologies,” commented Julia Diaz, Dufry Group CEO. “Alibaba Group is a leader in digital commerce with an ecosystem of more than 800 million consumers in China. Dufry holds a leading position in travel retail globally and brings in its strong operational expertise in 65 countries and over 2’500 shops. By fostering existing and new business models in offline and online travel retail, we are convinced the Joint Venture will capitalize on growth opportunities and will support Dufry to become the leading digital travel retail company worldwide.”

 

Impact on the stock?

If we look at it closely, this Joint Venture might not only give a floor to a V-shaped recovery of business as soon as traveling goes back to normal again, but it might also be the possibility for minor investor to participate in the potential upside.

A Joint Venture with one of the world’s largest retail and e-commerce companies with such a client base and ecosystem will give the opportunity to Dufry to expand its Asian presence, expanding its network and and digital offering in Shanghai and Chendu airport shops as well as in Hong Kong and Macau.

The impact of the news could already be seen on the stock, which closed at 27.94 on Friday evening to jump up to around 32 at the time of writing (Monday 5th, 11am). One will need to see if it is ever able to go back to the almost CHF100 it used to be at. The stock price will most likely move again after the extraordinary meeting taking place October 6th. 

 

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Dufry stock (Source: Investing.com)

 

 

Sources:

https://www.dufry.com/en

https://www.dufry.com/en/press_release/2020-10-05/dufry-and-alibaba-group-have-agreed-form-strategic-joint-venture-china-and

https://www.moodiedavittreport.com/dufry-and-alibaba-group-to-form-strategic-joint-venture-in-china-alibaba-to-take-up-to-9-99-interest-in-dufry/

 

 

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