(Bloomberg) -- Fosun Tourism Group shares saw their biggest jump on record in Hong Kong, after the owner of luxury resort chain Club Med SAS 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% after Fosun Tourism resumed trading on Wednesday. The firm proposed to buy back the remaining shares that Fosun Group doesn’t 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 ($1) per share, representing a premium of about 95% to its last closing price on Nov. 26, the day before trading was suspended.
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 $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% 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, people 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 an interview with Bloomberg Television 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 Ltd., Bloomberg News has reported.
--With assistance from Dong Cao and Kari Lindberg.
(Updates the first and second paragraphs with stock price move.)
©2024 Bloomberg L.P.