(Adds quotes from union representatives after meeting)
By Dominique Vidalon
PARIS, July 10 (Reuters) - Club Mediterranee suitor Andrea Bonomi met trade unions on Thursday to outline his plan for the French holidays group, but did not convince staff representatives worried about possible job cuts.
Bonomi is now the largest shareholder in the company that pioneered all-inclusive holidays after building a stake of nearly 11 percent this year. He is offering 21 euros a share for Club Med, valuing it at 790 million euros ($1.1 billion).
The Italian tycoon’s offer tops a one year-old 557 million euros offer by China’s Fosun International and French private equity group Ardian. That offer was priced at 17.50 euros a share but became mired in legal challenges and shareholder opposition to it as too low.
Bonomi must convince Club Med shareholders, staff and the French establishment his offer is best for Club Med’s future. Part of his strategy to win support has been to promise accelerated expansion in the country.
Unions were still unconvinced after the meeting.
“They tried to reassure us, saying there would be no restructuring, no job cuts, but we remain very cautious. They did not really explain how they would develop the Club,” said Force Ouvriere (FO) representative Etienne Dakiche, who attended the meeting.
“At this stage we feel we lack elements to form an opinion on the offer and we are going to ask for another meeting (with the Bonomi camp) to get more details,” he added.
Bonomi officials could not be immediately reached for comment.
FGTA-FO trade union representative Dejan Terglav had told Reuters by phone before the meeting: “Bonomi’s offer is attractively priced but there are fears he might tighten cost cuts and cut jobs. We want to see how serious he is about expanding in France.”
FO is the main trade union at Club Med and has been backing the lower Ardian-Fosun offer. It recently met with French Economy Ministry officials to voice its concerns.
But it also plans to meet with foreign ministry officials in the coming days. The foreign ministry took over responsibility for tourism in a recent government reshuffle.
A diplomatic source told Reuters this week: “We are keeping an eye on what is happening and talked to various players on all sides.”
Bonomi’s offer notably faces opposition from Club Med’s Chairman and Chief Executive Henri Giscard d‘Estaing - himself a shareholder, and who would keep his job should Fosun and Ardian win. He has played the patriotic card, saying a sale to Bonomi would hand control of Club Med to foreign investors.
“Nobody is immune to Mr Giscard d‘Estaing’s lobbying. We are following the subject very carefully. It’s a major French company that markets France and which many French holiday makers are close to. However it is not for us to intervene. It is a private listed company,” the same diplomatic source said.
Giscard d‘Estaing is the son of former president Valery Giscard d‘Estaing.
With a stock market value of 614 million euros and annual sales of 1.4 billion, Club Med competes with hoteliers including Intercontinental and Accor, as well as tour operators such as TUI Travel and Thomas Cook.
A recent drive to reinvent itself as an upmarket operator has been stifled by an economic downturn in Europe, which still accounts for 70 percent of its revenue. The operating margin of its holiday villages fell to 3.9 percent of sales in 2013 from 4.3 percent in 2012.
Fosun, with a 9.96 percent stake, and Ardian, with 9.4 percent, have said their plan is to accelerate Club Med’s shift towards China, which Club Med wants to make its second-biggest zone after France by 2015.
Bonomi has said he believed the future of Club Med was not solely in China but also in Europe and the Americas. He has also warned against neglecting the cheaper end of the holiday market.
$1 = 0.7331 Euros Additional reporting by John Irish; Editing by Andrew Callus and Mark Potter