Swiss-based travel agency Dufry is set to establish a joint venture with Alibaba Group. Both companies have the right fundamentals to boost retail business offerings.
Switzerland based travel retailer Dufry AG (SWX: DUFN) is set to open a joint venture (JV) with China’s Alibaba Group Holding Ltd (HKG: 9988). The Dufry JV plans were made known by Dufry drawing on Alibaba Group’s leadership in Chinese consumer retail and digital transformation with its global travel retail expertise.
As noted by the travel retailer, Alibaba will post an equity investment in Dufry with target ownership of up to 9.99% post capital increase. The commitment from Alibaba will prompt Dufry to convene an Extraordinary General Meeting (EGM) slated for the 6th of October 2020 in which the firm will issue up to 25 million shares, resulting in a potential issue size of approximately CHF 700 million. Alibaba will have a 51% ownership of the Joint Venture while Dufry will take up 49%.
Julian Diaz, Dufry Group Chief Executive Officer said:
“We highly value this partnership with Alibaba Group to form a strategic Joint Venture to explore growth opportunities and develop the travel retail business in China. We expect this collaboration to drive growth in Asia and with Chinese customers worldwide with the support of new digital technologies. 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”.
He noted further:
“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. We aim to better serve our customers and provide them anywhere with global products, services, and personalized offers across all platforms and devices”.
According to Dufry, the company has already secured a funding commitment from funds managed by Advent International Corporation or its affiliates (“Advent International”) to purchase shares at CHF 28.50 per share up to a maximum investment amount of CHF 415 million of the 25 million issued shares. Alibaba’s involvement will see the retail giant purchase the shares at the same amount as Advent International. Alibaba’s 9.99% stake will not exceed CHF 250 million (or such higher amount as agreed by Alibaba Group).
Dufry and Alibaba to Combine Core Strengths and Fundamentals
The two firms are combining their core strengths to form a business relationship that will strengthen the retail offering in Chinese markets. Dufry, with travel business in China as far back as 2008 has grown to become one of the core retail travel agencies serving its customers with offices in Shanghai and Chengdu Airports, and its presence extends to Hong Kong and Macau.
Alibaba Group is undoubtedly a leader in retail e-commerce and payments and with its technological advances, both firms believe the JV is off to a great start as it will be built on a strong business partnership and fundamentals.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.