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UPDATE 1-Autogrill's WDFG to pursue growth strategy after spin-off
October 1, 2013 / 3:21 PM / 4 years ago

UPDATE 1-Autogrill's WDFG to pursue growth strategy after spin-off

* WDFG debuts at 7.2 eur/shr vs fcast of 7.0 euros

* Autogrill starts at 5.8 eur/shr after split vs 5.3 in fcasts

* Both make further gains in later trading (Adds details, quotes, updates shares)

MILAN, Oct 1 (Reuters) - Newly-listed World Duty Free Group (WDFG), seen as a catalyst for consolidation in the global travel retailing sector, plans to grow organically and via acquisitions following its spin-off from parent group Autogrill, its chief executive said.

“The split has given us the opportunity to move up a gear, although our strategy doesn’t change,” Jose Maria Palencia said after the stock’s market debut on Tuesday at 7.2 euros a share, slightly ahead of the 7 euros expected by analysts surveyed by Reuters.

“In a market that’s still very fragmented there are various opportunities that we can pursue, both in terms of new long-term contracts and integration of other businesses,” he told Reuters.

Italy’s Autogrill has spun off its smaller but growing travel retail and duty-free unit from its food business, aiming to pave the way for possible tie-ups for both companies.

Palencia said that WDFG, the second biggest operator in the sector behind Dufry, hoped to extend its strong footprint in Europe and expand in the Middle East, South and North America and the Far East.

He declined to comment on any possible deals.

But among possible targets for WDFG, analysts cited Switzerland-based travel retailer Nuance and Paris-based Lagardere Services, which also operates duty-free stores and distribution services.

WDFG, which extended gains to trade at nearly 8 euros by 1500 GMT, is expected to report robust and profitable organic growth in the coming months, analysts said.

Autogrill’s food and beverages unit, which will continue trading under the company’s original name, started trading at 5.8 euros following the split, above expectations of 5.3 euros, and moved ahead to 6.3 euros by 1500 GMT.

“Everybody was expecting WDFG to do well, it’s a good company ... but following the recent investor briefing we also saw that Autogrill had good potential to be restructured,” a Milan-based analyst said, asking not to be named.

Autogrill’s catering business has been hit by reduced motorway traffic during the Italy’s two-year long recession.

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 travellers’ spending.

Following the spin-off, Autogrill 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.

On Monday, the joint stock closed at 12.99 euros. (Reporting by Agnieszka Flak and Elisa Anzolin; Editing by David Cowell)

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