The Chinese mainland’s largest tourism retailer China Tourism Group Duty Free Corp (CDF) announced it will acquire French luxury retailer LVMH’s Hong Kong and Macao travel retail businesses at no more than $395 million, based on the aggregate enterprise value of $400 million.
According to a company announcement on Tuesday, CDF will issue no more than approximately 7.33 million new shares in LVMH’s subsidiary company Delphine SAS, and approximately 4.64 million new shares to the duty-free group founder the Miller family, at a subscription price of HK$77.21 ($9.9) per share, representing a discount of approximately 11.66 percent on Monday's closing price. Net proceeds from the transaction will amount to a maximum of about HK$924 million.
After the subscription, LVMH and the Miller family will collectively hold approximately 0.57 percent of CDF’s total share capital.
“This cooperation will offer CDF and LVMH opportunities to leverage their respective strengths and forge further collaborations in Greater China to achieve mutual benefits in the areas of product sales, store establishment, brand promotion, cultural communication, travel services or customer experience,” the statement said.
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CDF added that by acquiring the intangible assets of DFS’ travel retail stores in Hong Kong and Macao, the tourism retailer can further expand its service network in the Guangdong-Hong Kong-Macao Greater Bay Area and establish its leading position in the regional travel retail market.
This is an important initiative for the company to accelerate its international business layout, and to actively implement the Greater Bay Area strategy and the “Chinese brands going global” strategy, CDF said.
CDF, the subsidiary of State-owned travel group China Tourism Group Corp, edged up 3.71 percent (HK$90.65 apiece) on Tuesday while the benchmark Hang Seng Index dropped 0.27 percent (26,487 points) with a market turnover of HK$228.2 billion. The company for a brief time soared by as much as 12 percent in the morning trading session upon the transaction announcement.
