September 12, 2014 / 10:22 AM / 5 years ago

China's Fosun fights back with counterbid for Club Med

PARIS (Reuters) - Chinese conglomerate Fosun launched a last-minute counter offer for holiday group Club Mediterranee CMIP.PA on Friday, outbidding Italian tycoon Andrea Bonomi hours before the deadline on a takeover saga that dates back to May last year.

Fosun Group Managing Director Jiannong Qian (L), Club Mediterannee Chairman and CEO Henri Giscard d'Estaing (C) and Club Med CFO Michel Wolfovski attend a news conference in Paris, September 12, 2014. REUTERS/Christian Hartmann

Fosun’s 22 euro-a-share bid is 1 euro-per-share higher than Bonomi’s and values the French vacation group at 839 million euros ($1.1 billion).

Through a vehicle called Gaillon Invest II, the offer supersedes a lower bid Fosun made over a year ago through a holding called Gaillon Invest.

Both the Fosun and Bonomi bids aim to take advantage of a business that is down on its luck, hit by the weak economy in its core market Europe, and by a stalled attempt to move upmarket. Both bidders hope to develop the brand - a pioneer of the all-inclusive holiday - in faster-growing China.

Gaillon Invest II still includes Fosun’s original French private equity partner Ardian, but this time Ardian is taking a back seat role and has sold its Club Med stake of about 8 percent to Fosun, giving the Chinese conglomerate 18 percent of Club Med as of Friday. Bonomi holds 10 percent.

Fosun and its Portuguese holiday insurance arm Fidelidade have also recruited a new partner, the Chinese travel agency U-Tour. Club Med chairman and Chief Executive Henri Giscard d’Estaing is still with the Gaillon partnership and would remain Club Med chairman. Bonomi’s proposal involves pushing him aside.

Gaillon Invest II also plans to open its capital to new partners, with 85-percent owner Fosun retaining a majority. Brazilian tourism-focused conglomerate Docas Investimentos has said it is interested in taking up to 20 percent, Gaillon Invest II said in its statement, although for the time being U-Tour has 7.5 percent, Ardian 5 percent, and Giscard d’Estaing 2.5 percent.

“The offer is based on a long term industrial plan backed by Fosun, an actor with a strong focus on tourism,” said Gaillon Invest II head and Fosun executive Jiannong Qian, who is already a Club Med board member.

Shares in Club Med were suspended on Friday, and Giscard d’Estaing, son of a former French president, told a news conference the Club Med board would consider the offer on Monday.

Prior to Friday’s developments, Club Med’s board had accepted that Bonomi’s 21 euro-a-share offer was in shareholder interests but said it had reservations - in particular with regard to the potential loss of Fosun as its Chinese partner.

A spokesman for Bonomi’s Global Resorts holding company said the 48-year-old Italian businessman was considering his options.

Under French takeover rules, any rival offer to Bonomi’s had to come by the end of Friday, five working days before his offer closes on Sept. 19.

RESORTING TO CHINA

Bonomi is a self-styled rescuer of businesses he sees as heading in the wrong direction.

In an interview with Reuters this year, he said he had never originally planned to make a full offer, but after building a stake and winning bank support, decided to make one after being asked by regulators to make his intentions clear.

He revived the fortunes of motorcycle maker Ducati in the mid-2000s before selling it to Volkswagen in 2012. He also has a major stake in high-end carmaker Aston Martin, and has dabbled in banking with a failed attempt to turn Banco Popolare de Milano into a joint stock company in 2011.

He has said Club Med, founded in 1950, needs to be careful not to neglect its lower-cost resorts in its move upmarket.

Fosun, for its part, is a Shanghai-based industrial, financial services and real estate conglomerate.

Over the past four years it has done more than $6 billion in deals with a view to focusing more heavily on insurance.

Earlier this year, Guo Guangchang, Fosun’s executive chairman, described Club Med as an ideal investment to tap booming Chinese demand for the kind of leisure it offers.

Club Mediterannee Chairman and CEO Henri Giscard d'Estaing attends a news conference in Paris, September 12, 2014. REUTERS/Christian Hartmann

“From a tourist’s point of view, you finally have time to travel, but you need to spend your time looking after your child,” he said. “Club Med takes care of the entire family.”

“China now is seeing the rise of a large middle class,” said Guo. “They are demanding a new way of life, and they very much enjoy many foreign brands.”

(1 US dollar = 0.7737 euro)

Additional reporting by Alexandre Boksenbaum-Granier; Editing by Andrew Callus, Elaine Hardcastle and Susan Thomas

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