Avolta, a travel experience provider in retail and food and beverages, has announced its agreement to acquire 100% of Free Duty from NWS, a conglomerate with a presence in Hong Kong and Mainland China.
The strategic move is expected to enhance Avolta’s positioning in the Asia Pacific (APAC) region, provide access to an additional 150 million travellers and potentially increase regional sales by $295m.
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The acquisition aligns with Avolta’s Destination 2027 strategy, which aims for early delivery and accelerated revenue growth in the APAC market.
Free Duty, a border travel retail operator in Hong Kong and the Greater Bay area, is forecasted to generate $295m in revenue in 2024.
The deal capitalises on current consumer trends and the region’s projected profitable growth, bolstered by a rise in passenger numbers.
The increase in duty-free allowances for mainland Chinese travellers returning from Hong Kong or Macau is expected to benefit all Free Duty stores.
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By GlobalDataThe allowance has recently tripled, going from 5,000 yuan ($690) to 15,000 yuan, which could further stimulate sales.
Avolta plans to fund the acquisition entirely with cash reserves, stating that no equity or additional financing will be necessary.
Post-acquisition, Avolta’s APAC revenues are set to rise by $295m due to the region’s more than 340 stores across ten countries.
Avolta CEO Xavier Rossinyol said: “Since launching our Destination 2027 strategy, we have been consistent and deliberate in growing our business, both organically and through bolt-on mergers and acquisitions. Free Duty is a highly successful player in the Hong Kong travel retail market, and we are stepping in at the right moment at attractive terms with the seller changing their portfolio strategy.
“We are grateful to NWS Holdings, as well as to rail operator MTR and the entire Free Duty team, for their vision and leadership, and their trust in Avolta to take Free Duty to the next level. The tireless efforts and dedication of our team, led in APAC by Freda Cheung, continue to be pivotal; thank you.”
