Benetton looks beyond travel chaos in Dufry Deal

The meal offer served by the Benettons to minority investors in Autogrill SpA arrived cold.

The billionaire family have just agreed to sell their majority stake in the motorway restaurant operator to Swiss duty-free retailer Dufry AG in a not very generous deal, gaining a position of influence in the combined company. This leaves the other shareholders deprived of the takeover at a premium they clearly expected.

In January, holding company Benetton Edizione SpA restructured to focus on three main areas: the eponymous fashion empire, Autogrill, and the infrastructure business Atlantia SpA in which it holds a minority stake.

Since then, the family has been busy defending these positions. When construction magnate Florentino Perez attempted to acquire Atlantia, Edizione teamed up with US buyout firm Blackstone Inc. to make its own bid for full control.

As part of the deal with Dufry, Edizione is to sell its 50% stake in Autogrill in exchange for a 20% to 25% stake in the Swiss company. The logic is pretty clear: diversification and exposure to a larger food and retail travel market. Edizione clearly does not want to cash in. The equity swap is priced at the three-month average share price of the two companies just before Bloomberg News revealed talks of the deal in mid-April.

It fits in with what looks like a strategy to reduce the Benettons’ concentration of wealth in Italy and seek opportunities in businesses they know, while being more open to partnerships along the way.

The family receives compensation for ceding control, judging by the proposed governance. He will be the main shareholder and will be able to appoint three of the 11 seats on the board of directors. The current Autogrill boss will lead Dufry’s North American operations.

There are nuances here of the late Leonardo Del Vecchio’s decision to merge designer eyewear maker Luxottica with Essilor in 2017. The luxury billionaire went from a controlling position in Luxottica to a significant minority stake in the company. enlarged, but kept the influence of the board of directors. The Benettons will rub shoulders with powerful co-shareholders in Dufry – e-commerce giant Alibaba Group Holding Ltd., buyout firm Advent International, the Qatar Investment Authority and luxury group Richemont.

For other Autogrill shareholders, a clean takeaway at a decent price would be better, hence the stock’s plunge on Monday in disappointment. They are, however, offered a slightly better offer than the Benettons financially, as they get a cash alternative at 6.33 euros ($6.37) per share (the three-month average price). It’s an attractive option, as the decline in Dufry shares since April means the value of the stock-based offering is lower.

Why would Autogrill shareholders be tempted to participate in the combination? There are some modest cost savings, but Dufry-Autogrill’s growth story should be taken with a grain of salt. Cross-selling food and non-food items at airports is a challenge. A panini with your Gucci watch, ma’am? Customers are either focused on the task at hand – getting to the door – or glued to their smartphones. That said, the airport transit experience is far from pleasant, creating a business opportunity for those who can improve it.

This two-step deal will take nearly a year, and its appeal could be very different then. The Benettons will take a long-term view. But Autogrill’s other shareholders will be focused on supporting their stocks in the near term, as travel and the businesses they power are still far from back to normal.

More from Bloomberg Opinion:

• The world through Del Vecchio’s Ray-Bans: Rachel Sanderson

• Airline chaos makes high fares harder to bear: Brooke Sutherland

• Kellogg Serves Hungry Investors a Snack: Andrea Felsted

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Chris Hughes is a Bloomberg Opinion columnist covering the deals. Previously, he worked for Reuters Breakingviews, the Financial Times and the Independent newspaper.

More stories like this are available at bloomberg.com/opinion

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