Fosun, Axa make $700m buyout offer for Club Med
Chinese conglomerate Fosun International and Axa private equity have submitted a friendly takeover bid for French-based vacation resorts operator Club Méditerranée (Club Med). It values the company at EUR556 million ($700 million).
According to a regulatory filing, the two parties are offering EUR17 per share for all outstanding shares, a 23% premium over Club Med's closing price on Friday. The company's stock jumped 22% on Tuesday in response to news of the bid. They are also offering EUR19.23, including coupon, per bond convertible in or exchangeable for new or existing shares (OCEANEs).
Fosun and Axa plan to operate Club Med as a joint venture, owning 46% each and the balance held by 400 of the company's managers. Henri Giscard d'Estaing would remain CEO.
Fosun currently holds 9.9% of Club Med and Axa has 9.4%. Should the offer be accepted, they, along with Giscard d'Estaing, would roll over their 19.33% in outstanding share capital and 24.87% in voting rights, plus 7.5% of the outstanding OCEANEs, into the acquisition vehicle.
The investors will scrap the deal if they fail to secure support from shareholders representing at least 50.1% of Club Med's ownership. They also reserve the right to perform a squeeze-out should at least 95% of the shares be voted in support of the buyout.
"I am convinced that together with Axa Private Equity and the current management, we have the means to face short-term uncertainties to support the development of Club Méditerranée, in particular in Asia, and consolidate its positions in Europe," said Jiannong Qian, general manager of Fosun's commercial investment department.
Hong Kong-based private equity firm A Capital brokered the deal that saw Fosun buy a 7.1% stake in Club Med two-and-a-half years ago, as well as participating as a co-investor. Fosun's strategic support has helped provide new direction for a business that was squeezed in Europe. Club Med has opened two properties in China and seen Chinese tourists numbers globally increase by about 40% in both 2010 and 2011.
"We are delighted that this will give A Capital investors liquidity and strong returns," said Andre Loesekrug-Pietri, chairman of A Capital. "This has been achieved by having the right Chinese partner aligned in interests with all other stakeholders in Club Med."
He expects that Chinese clients will become the second largest client group of Club Med by 2015.
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