Accor to Become Largest Shareholder in Club Med as It Expands into Leisure Activities

Strategic Insights -

As part of its bid to boost its appeal and profile, Accor, Europe's largest hotels group, will become the largest shareholder in Club Mediteranee after paying Euros 252m for a 28.9% stake. The deal, which represents a 31% premium over the company's closing price, is seen as an attempt by Accor to diversify into leisure activities, complementing its existing hotel business. Club Med's attempts to refocus on its core business of offering upmarket holiday village vacations are likely to be bolstered by the deal, which will also provide exposure to the company's extensive real estate portfolio. Accor's chief executive, Jean-Marc Espalioux, emphasized the benefits of the deal, stating that it will strengthen the company's image and improve its commercial side.

Key Takeaways:

  • Accor will pay Euros 252m for a 28.9% stake in Club Mediteranee, representing a 31% premium over the company's closing price.
  • The deal is part of Accor's diversification into leisure activities, with the aim of boosting its appeal and profile.
  • Club Med's attempts to refocus on its core business of offering upmarket holiday village vacations are likely to be bolstered by the deal.
  • Accor's chief executive, Jean-Marc Espalioux, emphasized the benefits of the deal, stating that it will strengthen the company's image and improve its commercial side.
  • The deal will expose Accor to Club Med's extensive real estate portfolio.
  • Club Med will benefit from Accor's powerful online booking service.
  • The Agnelli family will retain a 2.7% stake in Club Med, while CDC will finance the operation for Accor by underwriting a Euros 280m convertible bond issue.
  • Accor will dilute 2005 earnings per share by 3% due to a capital increase to finance the deal.
  • Accor has no intention of making a full bid for Club Med, and wishes its stake to remain 33%.

Statistics:

  • Euros 252m - Accor's payment for a 28.9% stake in Club Mediteranee.
  • 31% - The premium paid by Accor over Club Med's closing price.
  • 8.2% - The rise in Club Med's shares following the announcement.
  • Euros 37.10 - Club Med's shares price following the announcement.
  • Euros 33.08 - Accor's share price following the announcement.
  • 3% - The dilution of 2005 earnings per share by Accor.
  • 28.9% - The percentage stake in Club Mediteranee being acquired by Accor.
  • 2.7% - The percentage stake in Club Med being retained by the Agnelli family.
  • Euros 280m - The amount of convertible bond issue being underwritten by CDC to finance the deal.

Sources:

  • "Accor to become largest shareholder in Club Med" - Financial Times.
  • "Accor to pay €252m for 28.9% stake in Club Med" - The Telegraph.
  • "Accor to acquire 28.9% of Club Med for €252m" - Bloomberg.