UPDATE 1-Autogrill food unit seen around 5.3 euros/shr after split - Reuters survey

Mon Sep 30, 2013 11:07am EDT

(Adds details, analyst comments)

By Agnieszka Flak and Elisa Anzolin

MILAN, Sept 30 (Reuters) - Autogrill's food and beverages unit is expected to start trading around 5.3 euros per share from Oct. 1 after splitting off its duty free unit, which in turn is seen making its debut near 7.0 euros, a Reuters survey of six analysts showed on Monday.

Italy's Autogrill is spinning off its smaller but growing travel retail and duty-free unit from its food business, hoping the move will allow it to sound out market opportunities and pave the way for possible tie-ups at either company.

World Duty Free Group (WDFG) will be listed on the Milan stock exchange on Oct. 1, with its head office in Madrid.

The forecasts for the food and beverages unit, which will continue to operate under the name Autogrill, ranged from 4.4-6.0 euros, while the estimates for the WDFG price ranged from 6.5-8.2 euros.

Autogrill shares, which have gained 30 percent since the split was approved in May, were at 13 euros by 1422 GMT.

Following the split, each Autogrill shareholder will receive the same number of WDFG shares as those held in Autogrill. Initially, both stocks will be included in the FTSE MIB blue-chip index, but one may be removed within days if it does not meet the requirements of the index, the bourse said.

"The travel retail business offers more upside potential, given the possibilities for M&A in the sector in the short to medium term," an analyst said, but asked not to be named.

"On the food business, investors are waiting for the outcome of the planned restructuring to see how Autogrill positions itself in the weak market in Italy," another analyst added.

Autogrill's catering business has been badly hit by reduced motorway traffic during the recession in Italy.

Sixty percent of the unit's concessions in Italy will expire within the next three years, analysts said, giving the group an opportunity to reassess its presence in a market where the prolonged recession is still hitting traveller's expenditure.

Following the spin-off, the unit is expected to restructure and recover margins in its European business, and pursue new growth opportunities - organically and via acquisitions - in emerging and developed markets, analysts said.

Britain's SSP, which operates food and beverage brands at airports and in railway stations in 30 countries, could be a possible good fit for a tie-up with the unit, offering more exposure to northern Europe, analysts said.

WDFG is expected to report robust and profitable organic growth in the coming months, with analysts seeing various opportunities for the group to expand its already strong foothold in Europe and to grow in North America and a number of emerging markets, especially in Asia.

The group is now the second-largest operator globally in a still fragmented sector and is expected to become a driving force in future consolidation, they added.

"WDFG will definitely take on the role of a consolidator," another analyst added. "We also expect WDFG to participate in a number of new concessions currently on the table."

Among possible M&A targets for WDFG, analysts mentioned Switzerland-based Nuance and Paris-based Lagardere Services, citing various synergies between either company and WDFG. (Reporting by Agnieszka Flak and Elisa Anzolin)