Hotel Shilla said Monday it has inked a deal to buy a 44-percent stake in U.S. duty-free operator DFASS, a move that is expected to accelerate the No. 2 duty-free operator's global expansion plan as it competes with bigger rival Lotte.
"Hotel Shilla has decided to push for a strategic partnership with DFASS through stake acquisition by buying a 44-percent stake for $105 million," the company said in a press release following a board meeting held earlier in the day.
The agreement includes a call option to buy an additional 36-percent stake in five years. DFASS founder Bernard Klepach and his family currently hold a 100-percent stake in the firm that posted $518 million in sales in 2014.
Hotel Shilla lags behind its bigger rival Lotte Duty Free in domestic bids. In February, the company lost in a competition for operational rights to a downtown duty-free store on the southern resort island of Jeju. It secured rights to run stores in three zones at Incheon International Airport while Lotte Duty Free won the right to four zones.
Company officials hope that the agreement will help the Samsung affiliate expand beyond Asia to the United States. Last year, Hotel Shilla won contracts to operate duty-free venues in Changi Airport in Singapore and Macau International Airport in Macau, China.
"Hotel Shilla has secured a strategic bridgehead to enter the U.S. duty-free market with the move. It will help cut raw material costs as well as create synergy with Shilla Duty Free's domestic and overseas businesses," said a media official.
Miami, Florida-based DFASS, which specializes in in-flight shopping, provides service to some 27 global airlines, including Air Canada and Singapore Airlines, according to its website.
Shares of Hotel Shilla slipped 0.51 percent to 98,000 won ($87.90) on Monday while the main KOSPI edged down 0.03 percent to 2,036.59. (Yonhap)