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Lagardère buys Paradies to create American TR giant
Market consolidation continues apace as Lagardère Travel Retail announces it is to fully acquire US-based Paradies for US$530 million.
Lagardère Travel Retail joins the great airport retail consolidation race with its US$530 million Paradies acquisition.
The newly-combined company would generate annual sales “close to” $800 million across 100 airport locations, Lagardère said in a statement.
The deal will create the second biggest airport retailer in the market with Lagardère Travel Retail/Paradies operations ranked “at par” with Hudson/Dufry in North America.
Paradies reported sales of $515 million in the fiscal year to 28 June 2015. It was established as a family business in 1960 and has been controlled by private equity firm Freeman Spogli & Co. since 2010. The Paradies family retained a minority share.
Lagardère will fully consolidate Paradies operations, which include a recently launched food and beverage division alongside convenience and speciality retail. Lagardère’s core duty free expertise will ensure a “combination of global brands and American local and national concepts”.
The company said it expected “significant cost synergy potential” to be realised in the first year of integration with recurring synergies forecast to reach $15 million from year four.
Gregg Paradies, president and CEO, is to continue working for the new company to facilitate integration.
The transaction is subject to regulatory approval and is expected to close in the fourth quarter of 2015.
“A new phase”
Lagardère Travel Retail said in a statement that the acquisition would allow the company to “enter a new phase in its growth strategy”.
Dag Rasmussen, chairman and CEO of Lagardère Travel Retail, commented: “This acquisition transforms the presence of Lagardère Travel Retail in North America.
“It significantly strengthens our business and allows us to expand our concession portfolio and to develop relationships with our brand partners and suppliers.”
Gregg Paradies, president and CEO of Paradies, added: “We at Paradies are very excited to join a company of Lagardère’s reputation and international experience. Paradies and the Lagardère group share many similarities including our strong family cultures.
“The combination of resources and experience will help accelerate our growth and competitiveness in this very dynamic industry.”
The acquisition comes shortly after Dufry announced it has successfully closed its deal to purchase World Duty Free Group, creating an undisputed global leader with a 24% airport retail market share.