Dufry AG on Monday announced it has agreed with Chinese conglomerate Alibaba Group Holding for the creation of a partnership in the country, while the tech group looks to pour in capital with Dufry.
The Swiss-headquartered travel firm disclosed that the team-up with Alibaba in China's massive travel retail landscape will have Alibaba in full control of more than half of the merger, with Dufry getting 49%.
As a result, Alibaba proposes an equity capital in Dufry with a target stake of almost 10% of post-offering share investment. The strategic tandem brings in one roof a Chinese tech titan and the world's premier travel retailer in terms of revenues last year.
Dufry said it is considering securing around $763 million, and Alibaba said it will join. Private equity group Advent International Corp is also looking to pour at least $496 million. Shares of Dufry were up as much as 16%. Proceeds of the share disposition sale will help Dufry acquire its Hudson Ltd. U.S. division, the company disclosed.
According to Julian Diaz, Dufry Group chief executive officer, they highly value the collaboration with Alibaba "to create a strategic joint venture to explore growth opportunities and develop travel retail business in China," The Moodie Davitt Report quoted Diaz as saying.
Alibaba said it is proposing to acquire stocks at the same price as that of Advent International, or CHF28.50 a share, but will not infuse over CHF250 million, Dufry said.
Alibaba pointed out that it will bring in its well-entrenched network in China including its digital portfolio. Dufry, for its part, will bring to the table its existing travel retail business in the country, and will provide the needed support with its supply network and solid logistics capabilities.
Dufry currently has around 31,000 employees and announced in June that it was looking to trim down workforce expenditures by at least 20% to 35% as sales dropped.
Alibaba has invested a lot of money procuring stocks in the brick-and-mortar retail sector, as the company targets to boost its influence as part of goals to leverage its technology to upgrade and innovate physical commerce.
