AXA Private Equity and the Chinese conglomerate Fosun International are partnering to place a friendly offer, through an adhoc company, to acquire the French resorts company Club Méditerranée (Club Med) for €17 per share, or approximately €556m.
The price of €17 per share would reflect a premium of 28.4 per cent over the volume-weighted average price over one month.
Sales of Club Méditerranée, commonly known as Club Med, declined by 2.5 per cent to €763m for the six months ended April 2013 primarily due to poor performance in France and the rest of Europe from where the resort firm generates most of its revenue.
AXA and Fosun, which between them already hold nearly 20 per cent stake and about 25% voting rights in Club Med, will involve the managers of the resort firm to implement a strategic plan to overcome the tough environment of tourism market in Europe, particularly in France.
The strategic plan will include the development of resort business in the emerging and mature markets with the opening of new villages and the consolidation of commercial actions on these markets.
Dominique Gaillard, member of the executive committee of AXA Private Equity, said: “We are very happy to support Club Méditerranée for this new step of its development. We have been working with the management for two years to accelerate its strategy worldwide.”
Gaillard added: “With this project, we wish to pursue this work in the long term, thanks to our international footprint and the support we provide to the management. I am convinced that together with Fosun and Club Méditerranée teams, we will position the group as a leader on all of its markets.”
Jiannong Qian of Fosun said: “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.”
Henri Giscard d’Estaing will continue to lead Club Med as CEO, while Michel Wolfovski will continue as deputy CEO.
AXA Private Equity and Fosun will hold the equal percentage of shares in the adhoc company, while the management will hold the remaining shares.
Over the last 10 years, Club Med invested €1bn in refurbishing existing resorts and building new ones under the leadership of d’Estaing.
If the acquisition deal is successful, it would represent a high-profile takeover of France's iconic international brand by a Chinese firm.
Meanwhile, shares of Club Med grew by 22 per cent to €16.95, following the news of the takeover offer.
Société Générale advised Fosun and Axa on the transaction.