value and opportunity

Sometimes, the good old-fashioned simple ideas still work very well. One very recent example, which for some reasons I totally missed, was the recent spin-off of Word Duty Free from the parent Autogrill in the beginning of October.

The remaining business is the well-known restaurant business along Freeways, the duty-free business is the international business in most of the world’s airports.

If one looks at the Autogrill stock, the spin-off was a fantastic success:

A more than 50% outperformance against the index. The spun off stock World Duty Free now trades at a P/E of around 20, reflecting the assumed growth potential, the market cap is with 2 bn EUR higher than the parent (~1.5 bn). The CEO of the parent by the way is now CEO of the spin-off company.

I remember having read about the spin-off some months ago but I didn’t really follow-up. It is very interesting to see, how in this case this has unlocked value so quickly. It clearly shows also in my opinion, that some PIIGS companies with international exposure might still be heavily discounted by the market.

Unfortunately, I think the Autogrill spin-off is rather an exception than the rule for PIIGS companies, but I think it still makes sense to look for similar deals in the future.