BAA sells World Duty Free Americas

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World exclusive: By Martin Moodie

BAA today announced the sale of its World Duty Free Americas subsidiary to Duty Free Acquisition Corp., a privately-held corporation based in Miami, Florida for a total consideration of $121m (£84m), of which $115m (£80m) represents the World Duty Free Americas 7% Bond, due 2004, which remains with the transferring business.

BAA will continue to own World Duty Free Europe, the specialist duty-free retailer at the company's UK airports.

Mike Hodgkinson, BAA's chief executive said: "Two years ago we announced that World Duty Free Americas was a non-core business and, since then, we have closed the loss-making World Duty Free Americas in-flight division and sold the Export division and other assets. The sale announced today concludes our exit from World Duty Free Americas and is consistent with our strategy of focussing on our core airports business."

Brian Collie, BAA group retail director, added: "WDFA has repeatedly faced significant market pressures over the past few years and the exceptional difficulties of the current climate simply further confirms our view of the division as 'non-core'. As such, we view this transaction as the best opportunity to support the ongoing development of the World Duty Free Americas business.

"I would like to thank the WDFA team, management and associates for their support and commitment over the last four years and to wish them well for the future."

Duty Free Acquisition Corp is one of many companies privately owned by the Falic Group, a Florida-based consortium which, for over 20 years, has been actively involved in the luxury goods industry, including brand name fragrances and cosmetics, liquor, tobacco products, watches, writing instruments and gourmet foods.

Simon Falic, chairman of Duty Free Acquisition Corp welcomed the deal: "We are extremely excited about the purchase of World Duty Free Americas. Our origins and expertise in the luxury goods sector have lead us into the duty-free marketplace, where our goal will be to provide international travellers with an unparalleled range of world quality brands and products, together with the best possible customer service. Through equity partnerships and strategic alliances, World Duty Free Americas has been able to participate in duty-free and retail concessions in a number of major US airports. Given the success of relationships like these, we will continue to explore new opportunities with existing partners and other innovative approaches."

 The World Duty Free Americas business comprises three divisions of duty and tax-free stores:

• Southern Border - 31 stores along the border between the US and Mexico
• Northern Border - 30 stores along the border between US and Canada
• Airport Division - 45 stores in 10 international airports in the US

World Duty Free Americas made an operating profit (post amortisation of goodwill) of £7m in the financial year to 31 March 2001 on revenues of £322m ($464m). Since that date, trading conditions in the US have deteriorated as a result of both the general economic slowdown and more recently the terrorist attacks on 11 September.

Net assets of World Duty Free Americas at 30 September, 2001 were $258m (£179m). The resulting exceptional loss on disposal, including other costs and provisions of circa $270m (£187m), is made up primarily of the write-off of goodwill associated with the original acquisition. Proceeds will be used to reduce Group debt.