Chinese investor and private equity firm win over Club Med with sweetened bid

A Chinese investor and a French private equity firm have won over Club Med with an improved €557 million takeover bid, seeking to accelerate a shift at the holiday firm towards fast-growing emerging markets.

China's Fosun International and AXA Private Equity, who have teamed up with Club Méditerranée management and are already the firm's biggest shareholders, said yesterday they would pay €17.50 a share for the stock they do not already own, up from their previous offer of €17.

Club Med’s board said it would back the deal, and several of its top shareholders pledged support after staying mum on the previous offer. One small shareholders’ group had called the initial price too low.

Club Med shares were up 0.8 per cent at €17.45, close to the agreed offer price, although well below their 2007 high of almost €50.

Founded in 1950 and listed since 1966, Club Med was a pioneer of the all-inclusive holiday resort. However it fell on hard times in the past decade because of stiff competition and an unsuccessful expansion into services. A more recent drive to recast itself as an upmarket operator has been hampered by a flagging European economy.

Fosun and Axa, along with chief executive Henri Giscard d'Estaing, plan to accelerate Club Med's expansion in markets such as China to help it cope with tough trading in Europe, where it still makes over 70 per cent of its revenue.

The company has said it aims to operate five villages in China by 2015, including three by the end of this year.

Club Med is also speeding up expansion in Russia and Brazil, with the goal to lift the contribution of emerging markets to sales to 33 per cent by 2015 from around 25 per cent.

The firm, which operates around 70 resorts worldwide, competes with global hoteliers including Intercontinental and Accor, as well as tour operators such as TUI Travel and Thomas Cook. – Reuters