• by Thom Forbes  @tforbes, May 28, 2013

Club Méditerranée -- you know it as Club Med -- has its eyes on the Chinese market and a Chinese investment group has its eyes on the storied resort operation, which has rebranded itself several times since its founding in 1950 and currently targets an upscale consumer who has apparently been struggling along with everybody else. 

Chinese investor group Fosun International and AXA Private Equity, which is French-based, are joining with current management in a bid valued at about $700 million to acquire the stock they do not already own in the company, according to Reuters’ Dominique Vidalon. The €17 a share ($21.98) offer represents a 23% premium on Friday’s close; shares shot up more than 22% in trading yesterday on the news. The two firms would each hold 46% of the company; management would hold the remaining 8%.

The franchise “fell on hard times in the past decade because of stiff competition and an unsuccessful expansion into services, and its more recent drive to recast itself as an upmarket operator has been hampered by a flagging European economy,” reports Vidalon. The company has, in fact, lost money in eight of the past 13 years, according to Bloomberg data.

Club Med, which started as a “low-cost resort known for its wooden huts,” has closed 60 resorts, opened 20 new ones and refurbished the rest in its effort to turn itself into a luxury brand over the last decade, Thomas Varela and Laurie Burkitt report in the Wall Street Journal. 

“Today, about two-thirds of its resorts, called ‘villages,’ have four- or five-star ratings and shops that sell brands like Armani and Ralph Lauren. Guests can buy Swarovski jewelry at Club Med's Peisey-Vallandry ski resort in France,” Varela and Burkitt report. 

“The proposed deal gives a Chinese company an unusually visible role in the acquisition and development of a prominent Western brand, which was founded by a Belgian water polo player and for years defined the packaged exoticism of beach vacations for Europeans and North Americans,” write Eric Pfanner, Neil Gough and Keith Bradsher in the New York Times. “Now, though, the ascent of the Chinese tourist is helping reshape the world’s idea of the ideal getaway.”

The Fosun Group “has emerged as one of the country’s largest investment companies since it was set up in 1992,” writesForbes’ Russell Flannery, with interests in everything from insurance to mining to media. Two founders, Guo Guangchang and Liang Xinjun, are members of the magazine’s 2013 Billionaires List.

AXA Private Equity was spun off from AXA Group to a group led by its management earlier this year, as Kevin Olsen reports in Pensions & Investments. AXA itself was “the result of a series of mergers involving French regional mutual insurance companies. It has been operating under that name –- chosen “to be usable in most countries, easy to pronounce, start with the letter A, be self-sufficient so that it doesn't depend on a logo and short so it is easy to remember” -- since 1985, according to the corporate website.

The French government received advanced notice of the deal and “put up no opposition,” Thomas Varela reports in Market Watch. “"I didn't feel that this transaction created any issues for the French authorities," Club Med CEO Henri Giscard d'Estaing, who is the son of former French president Valéry Giscard d'Estaing, told a press conference.

“We have to accelerate our growth in emerging markets, the largest of which is China,” Giscard d'Estaing tells the Times. “That takes time, and you need shareholder and management stability. The goal of this agreement is to provide that stability.”

Cub Med currently has two locations in China and is planning three more openings by the end of this year, “hop[ing] to eventually build China into its second largest global market after France,” blogs Doug Young in the South China Morning Post.

“Club Med has been reinventing the alchemy of happiness since 1950,” according to a brief history of the “the inventor of the ‘all-inclusive’ holiday concept” on the corporate website.

“Our purpose in life is to be happy,” according to Club Med co-founder Gérard Blitz, who was not only a famous water polo player in the ‘20s but also a fighter with the French resistance in the ‘40s and yogi and entrepreneur thereafter. “The place to be happy is here. And the time to be happy is now.” 

The here and now may indeed be China -– it has replaced the U.S. as the world’s biggest source of foreign tourists, according to th Times -- but we doubt the new ownership will take The Guardian’s Simon Neville up on his suggestion that it “may want to consider renaming itself Club South China Sea.”