Club Med shares up over 20% as 2 firms bid for it

PARIS (AFP) - The two main shareholders in upmarket holiday group Club Mediterranee, including a Chinese firm, said on Monday that they would make a bid for the company, driving Club Med shares up over 20 per cent.

The two bidding companies, AXA Private Equity and Chinese conglomerate Fosun, said that their bid would be friendly and involved top Club Med managers.

The bid would be pitched at 17.0 euros (S$27.8) per share, representing a premium of 28.4 per cent on the average share price over a month, the two bidders said in a statement.

The company's shares shot up over 22 per cent to 16.96 euros in late afternoon trading.

The terms value the holiday company at about 540.6 million euros (S$884 million).

This offer is "a chance for the Club, it will give it time to achieve its transformation," said chief executive Henri Giscard d'Estaing at a news conference.

Club Med has been through difficult times and a refocusing of its strategy, and the financial outlook for the business now looks strong despite a depressed economic climate in Europe.

Club Med reported a 7.1-per cent rise in net profit for the first six months of its financial year to 18.0 million euros and said that the level of bookings for the holiday season in Europe was higher than at the same time last year.

In 2012, Club Med made a net profit of 2.0 million euros, and its operating margin was unchanged.

Despite a more stable financial performance, clouding the company's prospects are the "strong and likely long-lasting drop in the French market", which currently accounts for three quarters of clients, said Giscard d'Estaing.

The statement on Monday said that the proposed bid would enable shareholders to benefit from action to move the company further upmarket, and would enable the business to enter a new phase of development.

This would mean speeding up the strategy for developing the business in emerging markets and for strengthening its position in mature markets, which would involve the opening of new holiday villages.

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