Club Med: Ardian, Fosun threaten Benettons with legal action

Italian holding Edizione (controlled by the Benetton family) informed Ardian and Fosun it would not sell its Club Med shares as part of the take-private bid launched by the French private equity house and the Chinese conglomerate via the Gaillon Invest holding last year.

In a press release issued today (16 May), Gaillon warned Edizione that its earlier decision to sell its 2% stake was final – in the absence of a rival takeover bid – and stated it might eventually resort to legal action to enforce the earlier agreement.

Gaillon reminded Edizione that the Italian holding had formally agreed to sell its shares and convertible bonds in a letter sent to the Club Med chairman on 26 June 2013.

Gaillon needs to secure a 50.1% stake in Club Med before being able to initiate a take-private. But Ardian and Fosun have suffered a series of setbacks since announcing plans to offer €17 per share to Club Med shareholders back in May last year. They later revised their bid to €17.5, an offer welcomed by the company's board at the end of June 2013 and which would value the company at around €557m.

However, two minority shareholder groups appealed the regulator's decision to authorise Club Med's takeover in July 2013. The ensuing legal battle halted the takeover process for several months. Earlier this month, Paris's appeal court rejected the minority shareholders' claims, effectively greenlighting Gaillon's take-private bid.

But earlier this week, it emerged that Strategic Holdings, an investment vehicle controlled by Andrea Bonomi's BI-Invest, has been building up a 6.5% stake in Club Med over the past two months, with a view to eventually control around 10% of the business.

Strategic Holdings has reportedly been building up its Club Med stake at the current share price of circa €18.9; this is higher than the €17.5 per share offered by Gaillon as part of the takeover bid.

In a press release issued on 11 May, Gaillon stated that the price paid by BI-Invest did not represent a realistic exit strategy for current shareholders since it only applies to a limited number of shares. Ardian and Fosun went as far as to threaten to take their takeover offer off the table and reconsider their positions in Club Med's shareholding, should "the behaviour of Strategic Holdings and a few speculative funds" prevent them to reach the 50.1% threshold necessary for their take-private bid to be successful – a warning reiterated in today's press release.

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• Topics
• Buyouts
• France
• Ardian (formerly Axa PE)
• Take Private