LONDON — China Tourism Group Duty Free, the nation’s biggest travel retail operator with more than 80 percent of the domestic market share, on Monday said it has agreed to buy DFS’s travel retail business in Greater China in cash from its current owners LVMH Moët Hennessy Louis Vuitton and its cofounder, Robert Miller.
According to the agreement — through its wholly owned subsidiary China Duty Free International Ltd. — CTG Duty-Free will gain control of DFS retail stores in Hong Kong and Macao — excluding the City of Dreams store in Macao — and intangible assets of a series of DFS brands and intellectual properties for exclusive use in Greater China.
The deal is expected to be completed in the next two months, subject to customary closing conditions.
As part of the move, LVMH and the Miller family will participate in a capital increase of CTG DutyFree by subscribing to newly issued H-shares listed in Hong Kong. The subscription amount represents a small part of their proceeds, and the subscription will be made upon completion of the transaction.
DFS will continue to operate its other luxury travel retail operations worldwide following the transaction.
CTG Duty-Free and LVMH also entered into a memorandum of understanding under which both parties aim to set up a strategic cooperation, notably in the retail sector, where the strategies of both parties are aligned and in line with the current business model of the LVMH brands.
This cooperation will offer CTG Duty-Free, which operates nearly 200 duty-free stores across more than 100 cities worldwide, and LVMH opportunities to leverage their respective strengths and forge further collaboration in Greater China.
For example, DFS Yalong Bay, the largest project ever conceived by DFS, situated in the tropical city of Sanya at the southern tip of China’s duty-free island Hainan, is set to be unveiled in phases from later this year.
Stretching more tha 1.38 million square feet and carrying 1,000-plus luxury brands, including those from LVMH, the “seven-star” site will boast immersive concepts spanning categories such as fashion and apparel, beauty and fragrance, watches and jewelry, wine and spirits, fine dining, and food and beverage.
CTG Duty-Free is already the largest duty-free player in Hainan. This year it also expects the gradual unveiling of its large-scale, 2.1 million-square-foot, duty-free retail complex in Sanya’s Haitang Bay in partnership with Swire Properties.
Luke Chang, executive director and president of CTG Duty-Free, said the acquisition of DFS’ Greater China retailer business will further expand its service network across the Greater Bay Area.
“CTG Duty-Free remains committed to providing high-quality travel retail experiences to both domestic and international tourists, fulfilling its responsibility as a central state-owned enterprise-controlled listed company to support the high-quality development of the retail economy in Hong Kong and Macao. Executed under the leadership of its parent company, China Tourism Group, this represents a significant step in accelerating CTG Duty-Free’s international business layout and actively implementing the Greater Bay Area Strategy,” added Chang.
Ed Brennan, chairman and chief executive officer of DFS, said the DFS shopping experience will be carried forward and enhanced by the new skills and perspectives that CTG Duty-Free will bring. “We are proud of our journey in this region and grateful to everyone who has been a part of it.”
Michael Schriver, president of LVMH for North Asia, added that, “For decades, DFS has played a pivotal role in shaping Hong Kong and Macao into premier destinations for travel retail.”
“As we look to the future, we consider China Tourism Group Duty Free to be the ideal partner to operate the DFS business in Hong Kong and Macao and to lead it into its next chapter, thanks to their expertise and proven track record in travel retail. This whole operation underscores our confidence in the long-term potential of the Chinese market,” continued Schriver.
