Club Med

The board of Club Méditerranée threw its weight behind a modestly sweetened offer for the French holidays group after its two largest shareholders said they would raise their buyout price by 3 per cent.

Fosun, China’s largest private conglomerate and Paris-based Axa Private Equity, which already own 19.3 per cent of the shares, increased their €17-a-share offer by 3 per cent to €17.50. The offer for Club Med’s convertible bonds was raised to €19.79 from €19.23.

The Club Med board said on Tuesday it had voted unanimously to accept the improved offer, following last month’s initial offer by Fosun, Axa Private Equity and some members of the management, including Henri Giscard d’Estaing, chief executive.

The offer values Club Med, which pioneered the all-inclusive holiday concept when it was set up in 1950, at €557m.

Mr Giscard d’Estaing, the son of the former French president, said last month that the buyout would allow the group to continue moving upmarket without pressures stemming from falling bookings by austerity-hit Europeans.

The board holds 14.9 per cent of the shares, which together with the 19.3 per cent held by Fosun and Axa, means the offer is supported by shareholders representing 34.2 per cent of Club Med’s capital.

Fosun and Axa have said they will be equal partners in the offer, which is valid if they gain 50.1 per cent of the shares, on a fully diluted basis.

If there is a 95 per cent take-up, they may delist Club Med, taking it private after 47 years on the market. The formal buyout offer will be launched on July 12.

The €17.50 a share offer represents a 26 per cent premium to the company’s closing price of €13.85 before the first offer was made on May 27.

But some minority shareholders were unconvinced.

Romain Burnand, co-managing director of Moneta Asset Management, a Paris-based fund manager that holds 3 per cent of the shares, said: “Club Med is a recovery story and could be worth double what it is today in five years’ time. Therefore an extra 50 centimes is not going to make a difference to our view not to accept the offer, which we see as financially driven and opportunistic.”

Colette Neuville, head of Adam, the minority shareholders’ lobby group, said last month: “The problem is that management will get an entry price into a holding that could fully take advantage of the progression of the share price, while other shareholders are being offered the same price, but to exit.”

Under the terms of the deal, Axa and Fosun will each hold 46 per cent of a holding company while management will hold the remaining 8 per cent. The holding company will tender for the shares.

Shares in Club Med closed up 0.8 per cent at €17.46. They have hovered above €17 since the first offer.

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