Club Med takeover suffers setback

AXA and Fosun’s takeover of the resort operator was dealt a blow after an appeals court considering shareholder opposition to the deal set February 27 as the hearing date.

The friendly takeover of French resort operator Club Méditerranée hit a snag on Tuesday when a French court set February 27 as the date it will hear opposition to Fosun and AXA Private Equity’s deal.

AXA Private Equity declined to comment. Fosun and Club Med were unable to respond to a request for comment by press time.

The two firms had their offer of €17.50 per share, which is equal to a total bid of €557 million, accepted by Club Med's board in June.  The June bid was not the pair’s first effort at securing Club Med, but shareholders had deemed a previous offer to be too low.

In late May, the pair offered €535 million for all shares and securities in the business. The offer was equivalent to a price of €17 per share, which represented a premium of 28.4 percent over the company’s average share price during the previous 30-day trading period. 

But even the subsequent higher offer has faced opposition. Minority shareholders CIAM, a merger arbitrage fund, and Adam, a French minority shareholders’ association, launched an appeal to stop the deal in July. CIAM argues that the price is too low and that the valuation experts used to come up with the price are not independent from AXA Private Equity.

The structure of the takeover also raises concerns over conflicts of interest, according to a statement from CIAM. Under the terms of the takeover, AXA and Fosun’s stake would increase to a combined 92 percent from about 19.3 percent, with the remaining 8 per cent held by Club Med’s management.

Club Med noted in a statement that the French stock market regulator “promised to defer the closing of the tender offer at least eight days after the court judgement”.