FOSUN Tourism Group shares saw their biggest jump on record in Hong Kong, after the owner of luxury resort chain Club Med offered to buy back shares from minority holders as it seeks to boost growth as a private company.
Share prices surged as much as 83 per cent after Fosun Tourism resumed trading on Wednesday (Dec 11). The firm proposed to buy back the remaining shares that Fosun Group does not own and withdraw from its public listing in Hong Kong, according to an exchange filing on Tuesday that confirmed an earlier Bloomberg News report. The cancellation price is HK$7.8 per share, representing a premium of about 95 per cent to its last closing price on Nov 26, the day before trading was suspended.
Fosun Tourism’s biggest shareholder is Fosun International, which holds almost 80 per cent in the business. Shares of Fosun Tourism have declined 31 per cent this year, giving the company a market value of around US$640 million.
While the hospitality sector has been a relative 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 per cent from the same period a year ago. Although 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 becoming a closely held company, 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, sources familiar with the matter have said.
Listed in Hong Kong since 2018, Fosun Tourism’s share price has fallen from the initial HK$15.6 to HK$4 on Nov 26, the last day before trading was suspended.
Fosun International, founded by Chinese entrepreneur Guo Guangchang, owns Club Med through Fosun Tourism. Club Med is known for its all-inclusive resorts offering a range of leisure activities from fine dining and massages to yoga, scuba diving, and baby gym classes. It operates over 60 resorts globally in destinations including the French Alps and the Maldives, according to its website.
Separately, Fosun International has been “open to talks for some minority strategic partnerships” in its tourism business, including Club Med, Andrew Xu Bingbin, CEO of Club Med China and co-president of Fosun Tourism Group, said in September. Fosun aims to still have controlling power in its core businesses, with its tourism arm one of the group’s four key operations, he said.
A potential stake sale in Club Med had attracted interest from prospective suitors including Singapore’s CapitaLand Investment, Bloomberg News has reported. BLOOMBERG
