By REUTERS
Published: May 27, 2013 at 10:39 AM ET
PARIS — Club Mediterranee's top shareholders plan to take over the
French holiday firm in a bid that values it at around 541 million euros
($700 million), to accelerate its shift to fast-growing emerging
markets.
Chinese investor Fosun International and AXA Private Equity said on
Monday they would team up with management to offer 17 euros a share for
the stock they do not already own - a 23 percent premium to Friday's
closing price.
Chief Executive Officer Henri Giscard d'Estaing, who has spearheaded
Club Med's upmarket shift and expansion away from recession-hit Europe,
said the friendly bid would give the group the group freedom to focus on
emerging markets.
"We need to be free from short-term constraints for the next four to five years," he said.
Founded in 1950 and listed since 1966, Club Med was a pioneer of the all-inclusive holiday resort.
But it fell on hard times in the past decade because of 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 Fosun's
involvement would help Club Med's achieve its aim to make China its
second-biggest market after France.
Club Med aims to operate five villages in China by 2015, including three
by the end of this year, Giscard d'Estaing said.
Beyond China, Club Med is speeding up expansion in Russia and Brazil,
with the goal to lift the contribution of emerging markets to sales to
33 percent by 2015 from around 25 percent.
At 1355 GMT, Club Med shares were up 22.4 percent at around the proposed
17 euros offer price, but well short of its 2007 high of almost 50
euros.
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.
WEAK EUROPE
The bid 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 percent.
Bookings in Europe over the last eight weeks were down 4.6 percent,
mostly due to a weak French market, while they jumped 13.9 percent in
Asia. Net debt at the end of April stood at 112 million euros, down from
123 million a year ago.
Club Med competes with global hoteliers Intercontinental and Accor, as
well as tour operators 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 holds 9.4 percent of Club Med, while Fosun owns 9.96 percent.
Giscard d'Estaing, who became CEO in 2002 and who is the son of former
French President Valery Giscard d'Estaing, is also taking part in the
deal. He currently owns less than 0.01 percent of the share capital. He
will remain CEO if the takeover goes ahead, with Michel Wolfovski
remaining deputy CEO.
Control of Club Med will exercised through a joint venture that will be
46 percent owned by Fosun, 46 percent by Axa Private Equity, and 8
percent by 400 Club Med managers.
Should the buyers secure 95 percent of Club Med, they reserve the right to squeeze out other shareholders.
Dominique Gaillard, managing director of Axa Private Equity, said that
after four years, shares may also be listed in Hong Kong.
($1 = 0.7734 euros)
(Additional reporting by Alexandre Boksenbaum-Granier; Editing by Mark Potter and Louise Heavens)
COPY http://www.nytimes.com
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