Accor agrees Club Med share sale

Club Med went through a difficult period when it was not profitable

French hotel group Accor has agreed to sell most of its stake in all-inclusive holiday company Club Mediterranee.

Accor has been offloading assets it does not see as key to growth, including its 28.9% stake in Club Med.

There had been speculation that Accor was preparing to boost its holding in Club Med, and the holiday firm's shares fell 5% once the sale was announced.

Also on Friday, Club Med revealed that it had returned to profit after a pick up at its European operations.

During the fiscal first half of 2006, Club Med said that it had a net profit of 1m euros ($1.3m) compared with a loss of 25m a year earlier. First-half sales totalled 828m euros, up from 750m euros a year earlier.

'A new step'

However, when Accor decided to sell its stake in Club Med, the holiday company's business was still struggling through a slump in demand that followed the 11 September terror attacks and Asian Tsunami.

Accor said it would sell more than 22% of Club Med in two stages, with 16% going to a group of investors for about 199m euros.

Moroccan investment house Caisse de Depot et de Gestion de Maroc will hold 10% of Club Med as part of the pact, Accor said.

Air France-KLM will buy 2%, while an unidentified real-estate company will own 4%, Accor said, adding that it would sell another 6.9% at a later date.

Accor said it will hang on to a 6% stake in Club Med for business reasons.

"After the sale of our shares in Compass and our stake in Carlson Wagonlit Travel, this transaction is a new step in a strategy to refocus on our core businesses, hotels and services," said Accor's chief executive Gilles Pelisson.