Hotel Shilla in Korea duty free bid

Hotel Shilla is aiming to take over DFASS, the world’s largest in-flight duty-free specialty retailer, to expand its duty-free business to on-board duty-free shopping.

According to retail industry experts in Korea, Hotel Shilla selected Goldman Sachs as the managing underwriter for its acquisition of DFASS, and is now fine-tuning the detailed conditions for the purchase of controlling rights, such as the sales price.

The hotel currently runs its duty-free shop business through Shilla Duty Free Shop, and ranked seventh in terms of sales volume with US$1.9 billion in revenue as of 2013.

Founded in 1987, the US based retail group partners with approximately 30 airlines, including American Airlines, Air Canada, Singapore Airlines and Hong Kong Airlines, and supplies duty-free specialties. Along with the in-flight business, it also runs around 40 small-sized ground-based duty-free shops in the U.S. Its annual sales volume is around US$500 million.

It is reported that Hotel Shilla has been pushing to take over the DFASS Group to expand its Korea and Asia-focused business foothold across the globe. If it succeeds in acquiring DFASS, it can expand its duty-free business from ground-based and airport duty-free shops to in-flight shopping.

Last November, Bernard Benny Klepach, founder and CEO of DFASS, visited Seoul by himself and discussed the matter with Shilla officials.

An official at Hotel Shilla said: “Several other duty-free shop operators are interested in DFASS. As there are wide gaps between DFASS and us on the take-over terms, nothing can be confirmed right now.”