China conglomerate Fosun to sweeten bid for Club Med

By Reuters

Dec 01, 2014 10:51 AM EST

Chinese billionaire Guo Guangchang is set to sweeten his bid for the struggling French holiday group Club Mediterranee (CMIP.PA) to trump Italian tycoon Andrea Bonomi's offer in France's longest-running takeover battle.

A source familiar with the $1 billion-plus bid process told Reuters that Guo's conglomerate, the Shanghai-based Fosun (0656.HK), was set to raise its bid on Monday, and that Brazilian investor Nelson Tanure would be involved in the offer.

By 1216 GMT, the stock was steady at 23.94 euros. A second source with knowledge of the offer said Fosun would bid 23.50 euros. Club Med shares are up more than 70 percent since the bid battle began in May 2013.

Bonomi's latest offer stands at 23 euros per share and values the French company at 874 million euros ($1.1 billion).

Guo and Bonomi have been playing takeover leapfrog for months, with both men seeing turnaround potential in a business damaged by the weak economy in its core market of Europe, and by a stalled attempt to move upmarket.

Both also hope to develop the brand, pioneer of the all-inclusive holiday concept, in faster-growing China.

"It's very expensive in view of the situation of the sector and of the company. There is no economic logic to paying such a price unless you have a very long-term view," said Oddo Securities analyst Fehmi Ben Naamane.

Club Med's fortunes have not improved since Guo first bid. In November it said weaker demand in Europe, unrest in the Middle East and Ebola fears in Africa hit bookings and helped push it to an annual loss.

Bonomi has built an 18.9 percent Club Med stake, inspired by minority shareholder resistance to the first Fosun offer of 17 euros. Monday is the last day Guo, China's richest man, can come back with a higher offer, according to rules set by the French regulator AMF. He has 18.3 percent.

Club Med - forecast to be back in the black in the coming year - trades at a 12 month-forward estimated earnings of 18.82 times against 23.61 for its peers, Reuters data shows.

Guo said in November that Tanure had joined his team.

Through his Gaillon Invest vehicle Guo's partners also include French private equity partner Ardian, the management of Club Med, and Chinese travel agency U-Tour.

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