Hunsbury Capital - Belco Special Situations Fund Rejects Dufry AG's Exchange Offer for Shares of Autogrill S.p.A.

TORONTO, April 21, 2023 /CNW/ - Hunsbury Capital Inc. and Belco Private Capital Inc. today announced that the Hunsbury Capital – Belco Special Situations Fund LP, a shareholder of Autogrill S.p.A. ("Autogrill") (Milan: AGL), rejects the Mandatory Public Exchange Offer with Alternative Cash Consideration launched by Dufry AG ("Dufry") (SWX: DUFN) on 14 April 2023.

Edizione S.p.A. ("Edizione") indirectly exchanged its 50% interest in Autogrill on 3 February 2023 for shares of Dufry to become the largest shareholder of the company, owning ~28% of Dufry.¹  This private transaction triggered a mandatory bid to minority shareholders of Autogrill on the same terms (0.1583 Dufry shares per Autogrill share) or alternative cash consideration of €6.33 per Autogrill share ("Consideration").  The Consideration is based on the companies' 3-month VWAPs prior to 14 April 2022 ("Measurement Period"), over a year ago.²

Although Edizione's transaction with Dufry was an efficient maneuver to become the largest shareholder of Dufry in a single trade without paying a control premium, the 3-month VWAP of Autogrill from a year ago does not equal its fair value now.  This is especially true given the impact of COVID-19 on the travel industry during the Measurement Period and the subsequent recovery.  As discussed by the Chief Financial Officer of Autogrill on its 2022 Earnings Call in March 2023 – eleven months after the Measurement Period – the North American travel market had recovered to 2019 volumes by February 2023.³

The pending offer values Autogrill at ~6x EV/EBITDA, a valuation that we cannot justify for a pure-play food and beverage ("F&B") retailer generating most of its revenue and underlying EBITDA at North American airports.⁴  We value Autogrill at a premium to other F&B retailers given its airside positioning, and we consider North American comparators in recognition of Autogrill's geographical exposure.

Instead, the fairness opinion contained in the Offer Document values Autogrill relative to Compass Group plc, Elior Group S.A., Lagardère S.A, Sodexo S.A., SSP Group plc, and WH Smith plc.  We query this comparator set, noting the structural differences in competition and pricing power of selling F&B directly to airside passengers as compared to conventional European caterers and broader retailers.  As hungry and tired air passengers can attest, the two are not the same.

The Offer Document does not incorporate the valuation of any North American pure-play F&B company, and states that the companies in the comparator group "are considered potentially comparable, and in some cases only partially comparable." ⁵

We note the potential cost synergies of a merger with Dufry and we would exchanges our shares at an appropriate exchange ratio.  However, the Consideration does not adequately compensate us for the intrinsic value of Autogrill.

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¹ Dufry's press release: "Combination between Dufry and Autogrill successfully closed" (3 February 2023) 

² Page 24 of the Offer Document

³ Autogrill CFO: "Through the end of February, in North America, traffic has gone back to roughly the 2019 levels."

⁴ Slide 20 of Autogrill's F22 Results Presentation and Page 89 of Aurogrill's F22 Annual Report

⁵ Page 89 of the Offer Document

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Forward-looking statements contained in this document are based on estimates, assumptions, expectations, and projections which are believed to be reasonable as of the current date.  There is no assurance that these estimates, assumptions, expectations, and/or projections will prove to have been correct.  You should not place undue reliance on forward-looking statements contained herein. Actual results may differ and are not guaranteed.

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SOURCE Hunsbury Capital Inc.

Nandeep Bamrah, [email protected]