But for the past two years and until Wednesday, when Chinese conglomerate Fosun International Ltd. secured control of the French resort operator, Club Med has been the stage for one of France's hardest-fought takeover battles.
The prolonged bidding war brought a cast of pugnacious characters into eight rounds of offers and counteroffers: Dueling with Fosun managing director Qian Jiannong, whose group spans industries from pharmacy to mining, was rival Italian financier Andrea Bonomi, whose family holding company is known for turning around Ducati Motor Holding SpA, the motorcycle maker.
As the dust finally settles, Fosun's success in seizing control of the iconic French company comes with a bewildering question: Why pay €24.60 ($27.85) a share—a nearly 80% premium over the Club Med stock price before the battle began—for an unprofitable company that last served a dividend in 2001?
"A price higher than €22 per share would be hard to justify economically, given the challenging environment for the tourism industry", Paris-based broker Oddo Securities warned last September, before the last round of bids.
Fosun said it was attracted by the Club Med brand because it is widely known around the world.
"We never considered dropping our bid," Mr. Qian said in an email response to The Wall Street Journal.
According to a preliminary tally released by French stock-market regulator Autorité des Marchés Financiers Wednesday, the consortium of investors led by Fosun has amassed 92.8% of Club Med.
Fosun and consortium partner Ardian—a French investment firm and Club Med shareholder—said they intended to extend the bid offer for a two-week period to collect some of the remaining shares outstanding.
Fosun's takeover, which values the company at €939 million, marks a sharp change of fortunes for Club Med, which has been laboring through a turbulent makeover in the past decade.
After becoming Club Med Chairman in 2005, Henri Giscard d'Estaing —the son of former French President Valéry Giscard d'Estaing —sought to steer the company upmarket.
But as Club Med closed its legacy villages of wooden huts, building brand-new resorts with luxury shops selling brands such as Dior and Chanel, it was trapped in the economic recession that hit much of Europe in 2009.
Lacking cash to finance his ambitious plan, Mr. Giscard d'Estaing—who also holds the position of chief executive—turned to Fosun for help. The Chinese company bought a 7% interest in Club Med in 2010, pledging to assist the company in expanding through Asia.
As Europe plunged into deeper economic turmoil, however, the CEO began devising a plan to take Club Med private, people familiar with the matter said. In late 2012, Mr. Giscard d'Estaing again reached out to Fosun, inviting the company to launch a bid for the resort operator, they said.
At the time, the administration of Socialist President François Hollande was glorifying corporate patriotism, insisting that companies deemed strategic remain in French hands. Cautiously, Mr. Giscard d'Estaing also approached Ardian, the French investment firm, asking if it would pair up with Fosun to give a joint bid a strong French flavor, the people familiar with the matter said.
Through a spokeswoman, Mr. Giscard d'Estaing declined to be interviewed for this article.
In the spring of 2013, Mr. Bonomi approached Ardian, saying he wanted to join forces with the French firm for a joint bid on Club Med, a person familiar with the matter said. Ardian declined the proposition but kept mum on its own plans, the person said.
Weeks later, in May, Ardian and Fosun unveiled a joint bid for Club Med at €17 a share. After reaching a peak of €136 in 2000, Club Med's stock plummeted to €10 in 2009 and was languishing at about €14 when the bid was announced.
About a year later, the bid was still entangled in legal proceedings with minority shareholders seeking a sweeter offer, when Mr. Bonomi acquired an 11% stake in Club Med through on of his family's investment funds. That pushed Club Med shares above €17, undermining the attractiveness of the joint Fosun and Ardian bid.
Pressed by AMF, the French stock-market regulator, to clarify his intentions with regards to Club
Med, Mr. Bonomi launched a counterbid in June of 2014.
Battalions of lawyers and investment bankers spent that summer on the case. Mr. Giscard d'Estaing pressed Fosun and Ardian to retaliate with a higher offer, people familiar with the matter said.
Informed that Ardian was losing interest in the project, Mr. Giscard d'Estaing organized a meeting in Shanghai between Fosun executives and Mr. Bonomi, the people familiar with the matter said. The CEO proposed that the Chinese and Italian investors forge an alliance, the people said, but the talks quickly collapsed when it became apparent none of the participants in the meeting wanted to be a junior partner.
Fosun eventually informed Mr. Giscard d'Estaing that it was willing to sweeten its bid, even with a reduced participation from Ardian, the people said. Still, Fosun was seeking assurance that it wouldn't face a protectionist barrage in France, they said.
Through a senior banker, Mr. Giscard d'Estaing solicited help from French Foreign Minister Laurent Fabius, who agreed to meet Fosun representatives, one of the people familiar with the matter said.
According to the person, the minister delivered a clear message: the French government wouldn't stand in the way of a Chinese bid for Club Med.
Spokeswomen for Mr. Fabius and Club Med declined to comment.
Ardian eventually reduced its stake in the bidding consortium to 5.8% from 46%, leaving Fosun with the lion's share.
Early last month, the rival bidders were in the eighth round of their mano a mano. Mr. Bonomi was inclined to keep fighting with a sweetened counterbid of €25.50 a share, the people familiar with the matter said.
But KKR & Co., the U.S. private-equity firm which had formed an alliance with the Italian financier to buy Club Med, convinced Mr. Bonomi that time had come to concede defeat, these people said.
"We all felt that the price and other aspects of the transaction had reached the limit," a KKR spokesman said.
Source: Wall Street Journal by Thomas Varela
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