Hotels giant buys into Club Med

FRENCH tours operator Club Méditerranée today became the first victim of a disposals strategy by Italy‘s Agnelli family following the death of Umberto Agnelli last month.

The Agnelli group, which controls Italian carmaker Fiat, had been widely expected to sell its 21% stake in holiday operator Club Med. Today it announced that Accor, Europe's biggest hotel group, is to buy nearly 30% of the company, including all of the Agnelli family‘s holdings, for e252m.

The statement came as Club Med revealed a sharp reduction in first-half losses. The comparisons, however, were flattered by the fact that this time last year the war in Iraq and fears over the Sars virus badly hit its business.

The Paris-quoted company said net losses dropped from e29m to e4m this time while operating profit rose from e12m to e32m. Sales were static at e784m. The company said year-to-date summer bookings were up 2.4% compared to the previous year as of 29 May thanks to sharp growth in the Americas and Asia.

The Accor transaction values Club Med shares at e45 each, a 31% premium on Thursday's closing price of e34.28.

Accor said it was issuing a e280m bond convertible into stock or shares to pay for the stake. State-owned French bank the Caisse des Depots et Consignations have agreed to fully back the issue. It held 7.7% of Club Med's shares.

Speculation has swirled over the future of the Agnelli family's holding since patriarch Umberto Agnelli died last month.

Some analysts said a sale would be good news for the French holiday village operator, giving it a chance to find a genuine financial or industrial partner to back its development.

Accor's chief executive Jean-Marc Espalioux said the company is studying numerous opportunities to accelerate Club Med's development and increase its offering in a growth sector.

Club Med chairman Henri Giscard d'Estaing, son of the former French president Valery Giscard d'Estaing, said the Accor acquisition represented an 'exceptional opportunity for Club Med to become the undisputed leader in the sector of upscale, friendly holidays'.