BABA Alibaba Group Holding Limited

   By Olivia Bugault and Mauro Orru 
 

-Alibaba is planning an equity investment in Dufry

-Dufry will propose a rights issue at EGM with gross proceeds of around CHF700 million, including Alibaba's commitment

-Dufry, Alibaba will set up a joint venture in the Chinese travel retail market

Dufry AG's shares jumped Monday as Alibaba Group Holding Ltd. is planning an equity investment in the company.

At 1535 GMT, Dufry shares traded 19% higher at CHF33.46.

The Swiss-based travel retailer said it would propose the issuance of up to 25 million shares at its extraordinary general meeting on Oct. 6 following Alibaba's commitment.

Alibaba's planned equity investment in Dufry has an ownership target of 9.99% after the capital increase.

Dufry previously secured a commitment of up to 415 million Swiss francs ($450.8 million) in share purchases from private-equity firm Advent International Corp.

The company said the rights issue to be approved at the EGM could generate gross proceeds of around CHF700 million, including Alibaba's commitment.

The tech giant plans to buy shares at the same price as Advent International, or CHF28.50 a share, but won't invest more than CHF250 million, Dufry said.

"The envisaged proceeds are planned to be used to finance the previously announced acquisition of all remaining equity interest in Hudson Ltd. and for general corporate purposes, which may include the setup and operations of the above-mentioned JV with Alibaba Group to pursue growth opportunities in China and to accelerate Dufry's digital transformation," Dufry said.

Analysts at U.S. bank Citi said the increase in the size of the rights issue to around CHF700 million from CHF500 million should strengthen Dufry's business flexibility during this period of travel uncertainty.

Dufry and Alibaba also agreed to set up a joint venture in the Chinese travel retail market, with Alibaba owning 51% and Dufry retaining 49%.

Write to Olivia Bugault at olivia.bugault@wsj.com and Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

(END) Dow Jones Newswires

October 05, 2020 12:21 ET (16:21 GMT)

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