BackTop investors seek to buy Club Med in $700 mn deal
Fosun International, AXA Private Equity to team up with firm’s management to offer €17 a share
Premium(AFP)
Paris: Club Mediterranee’s top shareholders plan to make a bid valuing the French holiday firm at around €541 million ($700 million), seeking to accelerate its shift to fast-growing emerging markets and away from recession-hit Europe.
Chinese investor Fosun International and AXA Private Equity said on Monday they would team up with management to offer €17 a share for the stock they do not already own—a 23% premium to Friday’s closing price.
Founded in 1950 and listed since 1966, Club Med was a pioneer of the all-inclusive holiday resort.
But it fell on hard times earlier this century amid stiff competition and an unsuccessful expansion into services, and its more recent drive to recast itself as an upmarket operator has been hampered by a flagging European economy.
One Paris-based trader, who declined to be named, said the involvement of China’s Fosun in the offer could help Club Med’s chances of succeeding in that country.
“This generous friendly bid has great chances of success. The management always made clear it has great plans to develop in China and was clearly seeking a business partner, “ he said.
“The fact that the management would remain in place and the presence of a French institutional (AXA) in the deal is also making the bid easier to accept."
At 0905 GMT, Club Med shares were up 22.9% to trade around the proposed €17 offer price. The stock has recovered from below €8 in 2009, but is well short of its 2007 high of almost €50.
Club Med, which operates around 70 resorts, said it would appoint a committee of independent directors to assess the offer, which is expected to be filed in the next few days.
Fosun first invested in the French company in 2010 and Club Med reiterated on Monday it hoped to make China its second-biggest zone after France by the end of 2015.
Weak Europe
The bid proposal comes as travel firms and airlines across Europe have seen bookings fall in recent months.
Club Med said on Monday operating income at its holiday villages in the first-half ended April 30 fell 6.4%.
Bookings in Europe over the last eight weeks were down 4.6%, mostly due to a weak French market, while they jumped 13.9% in Asia. Net debt at the end of April stood at €112 million, down from 123 million a year ago.
Club Med competes with global hoteliers such as Intercontinental and Accor, as well as tour operators such as TUI Travel and Thomas Cook.
The move does not necessarily signal a new wave of takeovers In the sector, according to Christian Jimenez, who heads the Diamant Bleu Gestion fund.
This is “a very specific takeover," he said. “Fosun was already in the capital and intended to raise its stake and Club Med’s management backs the deal."
AXA Private Equity currently holds 9.4% of Club Med, while Fosun owns 9.96%.
Club Med chief executive Henri Giscard d’Estaing, who became CEO in 2002 and has spearheaded Club Med’s upmarket shift, is also taking part in the deal.
Giscard d’Estaing currently owns less than 0.01% of the share capital. He will remain CEO if the takeover goes ahead, with Michel Wolfovski also continuing to be deputy CEO.
Should the buyers secure 95% of Club Med, they reserve the right to squeeze out other shareholders.
Societe Generale is advising AXA Private Equity and Fosun on the deal. Reuters
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