HONG KONG: Fosun Tourism Group is nearing a buyout offer to take itself private, people familiar with the matter say, as the owner of luxury resort chain Club Med SAS seeks to boost growth as a closely held firm.
Fosun Tourism is poised to propose buying back the remaining shares that Fosun Group doesn’t own and withdraw from its public listing in Hong Kong, the people said, asking not to be identified because the matter is private.
The company may offer a cancellation price of HK$7.8 per share, representing a premium of more than 110% to its Nov 25 closing price, the people said.
Fosun Tourism’s biggest shareholder is Fosun International Ltd, which holds almost 80% in the business.
Shares of Fosun Tourism have declined 31% this year, giving the company a market value of around US$640mil.
The stock was suspended from trading on Nov 27, pending an announcement.
While the hospitality sector has been a relatively bright spot in the slowing Chinese economy, tourism is also feeling the pinch as consumers increasingly hunt for bargains and pull back on spending, including when they travel.
Fosun Tourism saw its first-half profit from operations fall 23% from a year ago.
While Club Med recorded strong growth, some of the firm’s resort projects in China reported decrease in business due to slowing domestic demand and a decline in the property market.
By going private, Fosun Tourism may seek to focus on boosting the company’s value in the long term by investing in its core businesses while transitioning into an asset-light operation, the people said.
Talks are still ongoing and certain details may change, the people said.
Listed in Hong Kong since 2018, Fosun Tourism’s share price has fallen from the initial HK$15.60 to the current HK$4 on its last trading day on Nov 26.
Fosun International, founded by Chinese entrepreneur Guo Guangchang, owns Club Med through Fosun Tourism. — Bloomberg
