ANALYSIS: The winners and losers in the Aldeasa race

John Gallagher

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How do yesterday's developments affect the many parties with interests in the process?

Autogrill seems to have won the battle for Aldeasa after stock regulator CNMV's announcement that Dufry has not improved on its initial bid. But, after raising its winning offer by about 11%, has the company overpaid?

Autogrill is an experienced operator of restaurants and gift shops in airports around the world. Through subsidiary HMSHost it runs concessions at several North American locations and some key European ones—notably Amsterdam Schiphol. But it has little experience of the beauty and luxury goods sectors. Is travel retailing in Spain and elsewhere a similar science to gift shop retailing in north American airports? Autogrill could use the acquisition as a stepping stone from which to enter the catering business in Spanish airports—currently its business in the country is limited to catering at motorways and railway stations—but the big concessions are already allocated and the company will need to be patient.

Aldeasa is regarded as a well-run company and there will not be much scope for cost cutting. Finding ways to increase productivity could prove challenging. The fate of the 300 staff at Aldeasa's head office is unclear; Autogrill has a small office in Madrid and it will be interesting to see if the new owners decide to integrate the two operations.

If Aldeasa's shareholders accept the offer from Autogrill's specially formed subsidiary Retail Airport Finance (RAF), tobacco company Altadis will swap its 34.5% stake in Aldeasa to become a 50% partner in RAF. But what role will Altadis play in the new venture? Altadis has often stated that its stake in Aldeasa is non-core and merely financial. The cooperation with Autogrill could signal a new business direction.

Which party will dictate RAF's strategy? The Spanish financial press has hinted that former minister Javier Gomez Navarro will be named the new chairman of the company. Gomez Navarro has been working as a consultant to Altadis during the bid process and could be an effective bridge-builder between Aldeasa and Spanish airport authority AENA. Given the tensions that have been revealed during the bidding process, the relationship between Aldeasa and AENA will be crucial to the future profitability of the company.

AENA will fight any move from Aldeasa to reduce staffing levels or opening hours at Spain's airport shops. The authority has stressed that a high level of customer service is necessary from all concessionaires. At almost 11 times Aldeasa's EBITDA, RAF's bid will force it to find efficiencies that could affect operations at Aldeasa's stores.

The only clear winners in the bidding race are the Aldeasa shareholders. Small stakeholders who have retained their shares while the market speculated on Aldeasa's future have been rewarded. Among these, the Spanish government holds a 5.06% stake via state holding company SEPI. The RAF offer will enable it to dispose of the shareholding, which it had previously declared it was going to sell in the market. Savings bank Cajastur has also done well from the deal. Its 6% shareholding will bring in more than €46m ($61.33m)—€27m ($36m) more than it paid for the shares

It remains to be seen who will emerge from the bidding with regrets. If RAF cannot drive the business in the way it is hoping then both Autogrill and Altadis could be burnt. Suppliers to the Spanish travel retailer may also be worried as the new owners look to increase profitability by reducing costs and increasing margins.

The GEA consortium withdrew from the race last week, citing concerns over the retailer's relationship with AENA as a key motive. And Dufry Group refused to alter the terms of its offer. But Dufry may still have options to gain some of the business that made Aldeasa appear attractive to the Swiss retailer in the first place  (click here for more on that issue), and only the future performance of Aldeasa will provide insight into whether GEA's analysis of the situation was correct.