Duty Free International Inc., the dominant operator of duty-free shops along the U.S.-Canadian border, made a long-expected move south yesterday with the acquisition of UETA Inc., the owner of about 30 tax-free stores at 14 crossing points between the United States and Mexico.
The deal will nearly double the size of DFI, a Ridgefield, Conn.-based company with major operations in Glen Burnie. UETA also owns retail and ship-supply operations in Miami.
DFI Chairman David H. Bernstein said that with the acquisition, sales for this fiscal year probably will exceed $400 million. DFI posted $188 million in sales during its most recent fiscal year; sales at San Antonio-based UETA 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 was the sixth-largest percentage gainer on the New York Stock Exchange yesterday, closing at $52.75, up $6.375, or 13.7 percent.
The acquisition will not add debt to DFI's books. Under the agreement announced yesterday, 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 might be UETA's retail, wholesale and ship-supply operations in the port of Miami, which could give DFI a foothold in the Caribbean duty-free market.
UETA, a privately held company, also operates duty-free shops in the San Antonio and McAllen, Tex., airports in addition to a ship-supply business in Los Angeles.
Gerry Egan, DFI's chief financial officer, said UETA's Mexican border operations would join DFI as a fourth operating division. The others are Ammex, which operates 49 duty-free and nine gift shops along the Canadian border; Fenton Hill American Limited, which has 16 duty-free and 14 gift shops at international airports; and Samuel Meisel & Co., the Glen Burnie-based unit that supplies embassies and cruise ships with duty-free merchandise and is a wholesaler for other duty-free businesses.