Fight for Club Med at fever pitch as Kerzner-backed bid takes lead

A takeover tussle of 18 months for French resort company Club Méditerranée SA has taken a new turn as funds associated with Italian investor Andrea Bonomi sweetened their bid just three days after the latest rival proposal.

Bonomi said that the offer of €24 a share from Global Resorts SAS trumped the prior bid from Chinese billionaire Guo Guangchang's Fosun International by 50c, and valued Club Med at €915-million (R12.5-billion), including a €25.35 offer for each convertible bond.

Club Med, which has struggled to generate profits in recent years, has now received seven offers, starting with Fosun's initial approach in May last year.

The rival bidders both plan to refocus the iconic French brand on emerging markets that are spurring global tourism despite a background of stagnant economic growth, military conflict and the Ebola outbreak.

Bonomi, backed by international hotelier Sol Kerzner and resort operator PortAventura, said in Paris on Friday that Global Resorts would return Club Med "to its rightful place in the world of tourism" and that further offers and counter-offers were possible.

"We'd all like this affair to come to an end, but this bid process seems pretty standard to me," he said.

Fosun's approach, in which Club Med CEO Henri Giscard d'Estaing has a stake, began at €17 a share, which it lifted to €17.50 six weeks later.

That offer was held up by legal issues, and on June 30 Global Resorts intervened with a bid of €21 a share. Fosun responded on September 12 with a €22 pitch, topped by Bonomi on November 12 with a à23 proposal that brought in KKR & Co alongside existing private-equity backer GP Investments.

Fosun, which envisages Chinese tourists making up a third of Club Med's clientele if its takeover plan prevails, came back with €23.50, before the latest 50c upgrade from Bonomi.

The Italian, who already owns almost 20% of the stock, said he would delist the company and keep it private for three to five years to bring stability if his bid was successful.

Trading in Club Med shares resumed at 3.30pm local time on Friday after a suspension, with the stock trading at €24.35, or 35c above the new offer, 14 minutes later.

French market regulator Autorité des Marchés Financiers set a deadline of December 19 for Fosun to respond.

Merger activity in the industry is heating up, with TUI of Germany combining with Europe's largest tour operator, London-based TUI Travel, to create an integrated company. TUI's Robinson brand, named after Robinson Crusoe, operates a resort chain similar to Club Med on a smaller scale.

The number of international overnight tourists will grow about 4.5% this year, according to the UN World Tourism Organisation.

- Bloomberg