World Duty Free to be sold

Leading UK travel retailer World Duty Free is to be sold by Ferrioval, the Spanish owner of its parent company, BAA. WDF operates 67 stores at seven UK airports, generating sales of £306 million ($631m) during the first nine months of this year.

The sale was widely anticipated following Ferrioval’s acquisition of BAA last summer. Commenting on the sales, WDF managing director Mark Riches said the company “would seek to have this probably concluded by mid next year”.

A consortium led by Ferrioval, a Spanish construction group, acquired BAA last year for £10bn ($20.6bn). The future of WDF – widely regarded as one of the best travel retailers in the business – has hung in the balance since this time, with Ferrioval finance director Nicolas Villen declaring that the retail arm was “not a strategic asset”.

Yesterday’s announcement will spark a flurry of activity among potential suitors. A number of private equity firms are expected to be interested, as are the established and highly acquisitive global travel retail giants such as Aldeasa, Dufry and Nuance. Independent analysts have provisionally valued the company at approximately £340m to £360m (($701m to $742m), however if a number of parties enter the chase the ultimate asking price could be significantly higher.

The liquor category generates approximately 20% of WDF’s total revenues, with Champagne and single malt Scotch whisky dominating sales. The company has managed to engineer substantial growth in recent years in spite of the serious space constraints at its main airport, Heathrow. The opening of Terminal 5 in March will alleviate this pressure, with WDF expected to implement a series of ground-breaking retail strategies. “We have got a huge agenda ahead of us in the next few months,” says Riches.

Ben Grant, 5/12/07