Chinese conglomerate winning Club Med bidding war

Club Med is expected to become Chinese controlled in a deal worth more than €900 million after an Italian billionaire conceded defeat in an 18-month bidding war.

The French all-inclusive resort company is due to back an offer from Fosun, a consortium led by Chinese billionaire Guo Guangchang, this week after Italian rival bidder Andrea Bonomi declined to raise his offer on Friday.

Bonomi’s decision puts an end to the longest-running takeover battle in recent French corporate history and removes uncertainty over the future of struggling Club Med, which is fighting weaker demand in Europe and heavy restructuring costs.

Investors are hoping Club Med’s new owners will invest in the operator’s upscale repositioning and expansion in markets such as China, which should widen a client base historically dominated by Europeans.

It is likely that Fosun, whose interests range from insurance to pharmaceuticals, will try to expand Club Med in emerging economies, where a growing middle class is likely to spend more money on leisure.

It is expected that Chinese tourists could account for up to a third of the holiday company’s customers if it is acquired by Fosun.

Club Med has operations in 40 countries and serves 1.2 million holidaymakers.

Bonomi’s vehicle Global Resorts said on Friday that shares it currently holds in Club Med would either be sold in conjunction with the bid by Guo’s Gaillon Invest II vehicle or on the market.

Guo said that the French group’s all-in pricing model would suit the Chinese market.

“Club Med is very suitable for a Chinese lifestyle,” he said. “Chinese society is organised around the family unit.”

As well as developing full-scale holiday villages, the company has revealed plans for a Center Parcs-style variant aimed at wealthy Chinese offering short breaks in a natural environment closer to big cities, according to The Times.

Club Med management, led by chief executive Henri Giscard d’Estaing, has consistently backed Guo’s offer which is why investors expect it will recommend his offer.

Gaillon Invest II is majority controlled by Guo’s Fosun conglomerate. It now comprises Fosun with a 62.6% stake, Portuguese insurer Fidelidade with 20%, French private equity partner Ardian with 5.8%, the management of Club Med with 2.9% and Chinese travel agency U-Tour with 8.7%.

Brazilian group Nelson Tanure, with which Club Med will build its fourth resort in Brazil, could also take a stake of up to 20% in Gaillon II once the offer goes through, Reuters reported.

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