French private equity firm AXA Private Equity and Chinese conglomerate Fosun International Limited (HKG:0656), holding 9.4% and 9.96% in Club Mediterranee SA (EPA:CU) respectively, said they were in talks with the management to buy the French travel firm via a joint bid.
The companies plan to offer Club Mediterranee’s securities holders EUR17.00 per share and EUR19.23 per bond convertible in or exchangeable for new or existing shares of the target, they said.
According to Reuters, the bid values the target at some EUR541m (USD699.4m).
The launch of the offer is subject to entering into agreements with CEO Henri Giscard d’Estaing and chief financial officer Michel Wolfovski and the subscription of credit facilities. The buyers said they would control the target via a joint venture, in which Fosun and AXA PE will hold 46% each, whereas Club Med’s 400 managers will take an 8% stake, including the 1.6% stake of Giscard d’Estaing and Wolfovski, in return for an EUR8m investment.
The bid is conditional upon an acceptance level of 50.1%. If the buyers secure 95% of the target, they may launch a squeeze-out bid for the remaining stake, they added.
The bid is seen to help the company speed up its development strategy in emerging markets on the back of difficult tourism market in Europe, and especially in France. AXA PE and Fosun commented that together they would support the development of Club Mediterranee, in particular in Asia, and consolidate its positions in Europe, helping it become a leader in all the markets where it operates.
The offer will be funded with stock and cash, as well as through the subscription of credit facilities.
AXA Private Equity, the private equity arm of French insurer AXA SA (EPA:CS), said it was taking a stake in German retail fashion firm Schustermann & Borenstein GmbH (S&B) from the Schustermann and Borenstein families.
The private equity firm did not disclose the value of the deal nor size of the S&B stake it would buy, but said that the family owners would keep a substantial financial interest in the company and would continue to run its business operations.
Wolfgang Pietzsch, managing director at AXA Private Equity expressed his satisfaction with the deal, saying that his company would back S&B as long-term investor and strategic partner, supporting management to carry out its strategy.
Meanwhile, Daniel Schustermann and Daniel Borenstein, the managing partner and managing director of S&B respectively, welcomed AXA Private Equity as partner, saying they were confident that the new investor would help the fashion trader implement its growth plans, they added.
S&B has two membership-based fashion stores in Munich and owns the exclusive online shopping community BestSecret.com.
The target firm also exports clothing to eastern European and other non-European Union countries.
According to informed sources cited by Reuters, the transaction values S&B at EUR300m (USD372m).
Axa Private Equity manages or advises USD28bn worth of investments in Europe, North America and Asia.
As financial firms and banks are seeking ways to exit their private equity investments, French insurer AXA SA’s (EPA:AXA) investment unit has put together a USD7.1bn (EUR5.6bn) fund to take advantage of this trend and acquire buyout stakes offered at a discount, according to a Financial Times report.
Axa Private Equity has raised the money from outside investors and it is looking to spend it on secondary deals, targeting stakes in private equity firms such as KKR (NYSE:KKR) in the US and British Permira Advisors LLP.
The paper cited Axa Private Equity’s head of fund of funds, Vincent Gombault, as saying that he expected banks to continue selling private equity stock for the next two to three years, estimating the value of the stock to be put up for sale at between USD40bn and USD50bn.
Banks, pension funds and insurance companies are willing to sell their long-term, risky private equity commitments at a discount as holding them became more expensive due to tougher regulatory norms imposed after the financial crisis.
Many pension funds in the US, which are the largest private equity investors worldwide, have been selling part of their buyout positions after making large investments in the sector in 2006 and 2007, the Financial Times cited Brenlen Jinkens, the chief in London of secondary deals advisor Cogent, as saying.
The money raised by Axa Private Equity for such deals is double compared to the initial amount projected by the French insurer, the report said.