DFI buys 30 duty-free Texas stores Purchase expands company's reach into the South.

March 17, 1992|By Michael Dresser | Michael Dresser,Staff Writer

Duty Free International Inc., the dominant operator of duty-free shops on the U.S.-Canadian border, made its long-expected move south today with the acquisition of UETA Inc. The San Antonio, Texas-based company has about 30 tax-free stores at 14 crossing points between the United States and Mexico, as well as retail and ship-supply Operations in Miami.

The deal will nearly double the size of DFI, a Ridgefield, Conn.-based company with major operations in Glen Burnie.

DFI posted $188 million in sales during its most recent fiscal year; UETA's sales topped $150 million.

For DFI the move is "very positive," said analyst Paul Bienstock of Moran & Associates in Greenwich, Conn. He said the deal would add about 5 cents a share to Duty Free's earnings this year.

Traders evidently agreed. DFI's stock jumped $4.125, to $50.50, before noon today on the New York Stock Exchange.

Under the agreement announced today, DFI will acquire UETA by issuing 4.35 million new shares, with a market value of slightly more than $200 million.

Those shares, which will go to UETA's current shareholders, will not dilute the value of DFI's stock, Mr. Bienstock said.

For that price, DFI gains significant new opportunities beyond the border stores in Texas, Arizona and California.

The most important may be UETA's retail, wholesale and ship-supply operations in the port of Miami, which could give DFI a foothold in the lucrative Caribbean duty-free market it has targeted for a long time.

UETA, a privately held company, also operates duty-free shops in the airports of San Antonio and McAllen, Texas; as well as a ship-supply business in Los Angeles.

Mr. Bienstock said the acquisition will help DFI cut its unit costs of acquiring merchandise. "They're going to have much more leverage when it comes to supplier negotiations," he said.

John A. Couri, DFI president and chief executive officer, said "We are extremely pleased with this opportunity, and look forward to a closing of the transaction in April. UETA is the predominant operator of duty free stores along the United States/Mexican border."

The acquisition requires the approval of UETA stockholders and the Federal Trade Commission.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.