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Chinese group bids for Club Med holidays

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(Globalpost/GlobalPost)

The two main shareholders in upmarket holiday group Club Mediterranee, including a Chinese firm, said on Monday that they would make a bid for the company, driving Club Med shares up over 20 percent.

The two bidding companies, AXA Private Equity and Chinese conglomerate Fosun, said that their bid would be friendly and involved top Club Med managers.

The bid would be pitched at 17.0 euros per share, representing a premium of 28.4 percent on the average share price over a month, the two bidders said in a statement.

The company's shares shot up over 22 percent to 16.96 euros in late afternoon trading.

The terms value the holiday company at about 540.6 million euros ($700 million).

This offer is "a chance for the Club, it will give it time to achieve its transformation," said chief executive Henri Giscard d'Estaing at a news conference.

Club Med has been through difficult times and a refocusing of its strategy, and the financial outlook for the business now looks strong despite a depressed economic climate in Europe.

Club Med reported a 7.1-percent rise in net profit for the first six months of its financial year to 18.0 million euros and said that the level of bookings for the holiday season in Europe was higher than at the same time last year.

In 2012, Club Med made a net profit of 2.0 million euros, and its operating margin was unchanged.

Despite a more stable financial performance, clouding the company's prospects are the "strong and likely long-lasting drop in the French market" which currently accounts for three quarters of clients, said Giscard d'Estaing.

The statement on Monday said that the proposed bid would enable shareholders to benefit from action to move the company further upmarket, and would enable the business to enter a new phase of development.

This would mean speeding up the strategy for developing the business in emerging markets and for strengthening its position in mature markets, which would involve the opening of new holiday villages.

Giscard d'Estaing said the company aimed to increase the ratio of clients from developing markets from a quarter to one third.

The Club Med board said that it noted that the bid was friendly but that it would give its assessment of the offer next month.

AXA PE and Fosun said that if their bid succeeded, Henri Giscard d'Estaing would remain chief executive and Michel Wolfovski would remain general manager.

The shareholdings held by the two bidders and Giscard d'Estaing account for about 19.33 percent of the capital and 24.87 percent of the voting rights.

AXA PE and Fosun said they would consider the offer a success if they received 50.1 percent of shares and that if they obtained the support of 95.0 percent of the share votes, they would de-list Club Med from the stock exchange.

Fosun is the biggest single shareholder in Club Med, having become a shareholder in 2010 and owning 9.96 percent of the equity and 8.48 percent of voting rights. AXA PE owns 9.4 percent of the equity and 16.48 percent of the votes.

If the offer succeeds, AXA and Fosun intend to hold equal stakes, with French shareholders holding a majority of the company, at least for the medium-term.

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CLUB MEDITERRANEE

AXA

http://www.globalpost.com/dispatch/news/afp/130527/chinese-group-bids-club-med-holidays