Fosun International considers SPAC tie-up among strategic options for Club Med – sources

Breaking News 26 October

Fosun International considers SPAC tie-up among strategic options for Club Med – sources

Fosun International [HKG:0656] is exploring options for France-headquartered Club Med, a holiday resorts operator majority owned by Fosun International’s leisure arm Fosun Tourism Group [HKG:1992], according to four sources familiar with the situation.

Among the options is a public listing of Club Med through a merger with a special purpose acquisition company (SPAC), three of the sources said.

A Fosun Tourism spokesperson denied having any plans or actions related to a SPAC merger for Fosun Tourism or Club Med.

Fosun International is looking to sell Club Med to a SPAC to raise money to support the group, replicating an ongoing SPAC merger of its luxury fashion arm Lanvin Group, the first source said.

On 23 March 2022, Fosun International announced the sale of Lanvin, aka Fosun Fashion Group, to blank cheque firm Primavera Capital Acquisition Corp [NYSE:PV] for USD 544m. Since then, Lanvin’s pre-money equity value has been cut to USD 1bn from USD 1.25bn, as per a regulatory filing. The deal is expected to close by the end of this year, the filing shows.

Debt-laden Fosun International is monetizing its assets to deal with a looming pile of maturities in 2023 amid a scarcity of offshore financing, according to a report by this news service’s sister publication Debtwire.

The conglomerate, which has businesses spanning across finance, tourism, pharmaceuticals, and environment, plans to sell up to USD 11bn worth of assets in the next 12 months, as per a media report. Aside from China, Fosun also has businesses in Australia, Brazil, France, Germany, India, Israel, Japan, Portugal, the UK and the US.

Fosun International initiated discussions for a sale of Club Med to potential SPACs at the onset of 2022, the second and third sources said. Talks with an interested party failed to yield a deal because of mismatched valuation expectations, according to the second source.

Back then, Fosun International had also sounded out private equity and corporates to consider buying Club Med beyond a de-SPAC merger, said the third source.

Since then, the Covid-19 pandemic has resurged in China, where Club Med operates 10 resorts. Club Med’s China resorts operations posted a business volume of CNY 122m in the first half of 2022, 44% lower than in the same period in 2021, as per Fosun Tourism’s latest interim results.

Deliberations are ongoing and the conglomerate hasn’t decided which route to take when it comes to Club Med’s sale, the sources said.

In 2015, Club Med was valued at EUR 939m (USD 936m) when Fosun took over the formerly Paris-listed holiday group. At the time, this news service reported that Club Med could re-IPO in five to seven years, after developing further in emerging markets such as China.

In September 2022, Fosun International’s Chief Financial Officer Gong Ping said the group is considering new strategic investors for Fosun Tourism to shore up the parent group’s finances, according to a media report.

Fosun International Holdings owns an 81.7% stake in Fosun Tourism.

Club Med posted a revenue of CNY 9.135bn for the nine months ended 30 September 2022, representing a 145.7% year-on-year (YOY) increase, partly thanks to a recovery in its American business, as per a stock exchange filing dated 20 October 2022.

Club Med’s resort operations posted adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)  of CNY 1.16bn for the six months ended 30 June 2022, reversing an adjusted loss of CNY 991.6m for the same period last year 2021, as per its latest interim results. Fosun Tourism’s latest financial report didn’t provide a number for Club Med’s assets.

Founded in 1950, Club Med provides all-inclusive leisure and holiday services, operating 66 resorts across EMEA, Americas, and the Asia Pacific, according to its latest interim report.

Besides Club Med, Fosun Tourism operates Atlantis Sanya, a Hainan province-based tourism complex, holiday destinations in the Chinese cities of Lijiang and Taicang, Chinese scenic resort brand Albion, as well as vacation businesses Thomas Cook China and Thomas Cook UK.

Fosun International’s stock has lost 40.7% while shares of Fosun Tourism have dropped 32.82% year to date. The Hang Seng Index has sunk by 34.19% over the same period, hitting 13-year lows.

Fosun International did not respond to requests for comment. Club Med declined to comment.

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