Fosun, Ardian bring in Jiuding for improved Club Med offer

The consortium is willing to pay EUR22 per share for Club Med, valuing the company at EUR839 million ($1.08 billion), according to a regulatory filing. This tops the EUR21 per share offered by Global Resources, which is controlled by Investindustrial, a private equity fund managed by Italian businessman Andrea Bonomi.

Last month, Fosun and Ardian withdrew their takeover bid for Club Med, although Fosun said it would continue "exploring any potential options which would serve Fosun's and Club Med's best interest," along with Ardian. The withdrawal came after French regulators approved the Investindustrial offer. Bonomi owns 11% of the company.

Fosun and Ardian continue to be aligned with Club Med's senior management, led by CEO Henri Giscard d'Estaing. They are launching the tender offer through Gaillon Invest II, a joint venture in which Utour-JD Investors is also a member. Utour-JD is ultimately owned by Utour and Jiuding Capital Growth Fund I and II. Fidelidade, a Portuguese insurer majority-owned by Fosun, is participating directly in the tender offer alongside Gaillon Invest II.

The investors plan on purchasing more than 50% of the share capital and voting rights in Club Med that are tendered in response to the offer, on top of which Fidelidade has committed to purchase a further 20% for up to EUR168 million. Three French banks have also agreed to provide EUR230 million in debt.

Fosun's contribution to Gaillon Invest II comprises EUR144.5 million worth of shares in Club Med and up to EUR471 million in cash. The Chinese conglomerate owns 9.98% of Club Med's issued share capital and 16.94% of its voting rights, having originally invested in the company in 2010. It has an agreement in place to buy an additional 8.3% of the issued share capital. Ardian - formerly Axa Private Equity - owns 9%.

If the tender offer is fully subscribed, Gaillon Invest II will own 80% of Club Med while Fidelidade will hold 20%. In the absence of leveraged financing facilities, the equity investments of the Gaillon Invest II members will be: EUR612 million from Fosun, EUR10 million from company management, EUR20 million from Ardian, and EUR30 million from Utour-JD. Any leveraged financing would be deducted from Fosun's equity contribution.

Fosun and Ardian first announced the privatization bid of Club Med in May last year and later increased the bid to EUR17.50 per share from initial EUR17. The revised offer received support from Club Med's board but the deal was delayed when minority shareholder's association ADAM and Charity Investment Asset Management (CIAM) filed complaints with AMF, arguing that the proposed acquisition price was too low.

Founded in 1950, Club Med operates 71 resorts across 40 countries on four continents, having intensified its focus on the luxury segment of the market in recent years. The company has two resorts in China but wants to have five in operation by 2015 with more than 200,000 Chinese customers. Club Med's revenue came to EUR1.4 billion for the 12 months ended October 2013, down 3.5% on the previous year. The company posted a net loss of EUR9 million compared to a profit of EUR2 million in 2012.

Fosun plans on working with management to "implement a strategy in line with the difficult environment of tourism market in Europe, in particular in France." This involves accelerating development in emerging countries while strengthening share in mature markets.

Investindustrial and its partners - Brazil's GP Investments and South African hotel magnate Sol Kerzner - have one month to submit an improved offer.

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• Topics
• Buyouts
• Greater China
• Europe
• Consumer
• buyout
• China
• Europe
• Consumer
• Fosun Group
• Ardian
• Jiuding Capital