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Owners look at sale of Fitness First’s global operations

Owners look at sale of Fitness First’s global operations
April 8, 2016

Fitness First’s global operations could soon be up for a sale after its owners appointed a team of advisers to examine options for the back-in-shape international fitness club chain.

Harris Williams, an independent American investment bank, and HSBC have been hired by US private equity firm Oaktree Capital Management (owners of Fitness First since 2012) to look at a potential sale or break-up of the business, which operates and licences gyms in the UK, Australia, the Middle East, India, Singapore and Germany

Bankers have been appointed after Fitness First, which came close to collapse in 2012, drew the attention of private investors and trade buyers after a strong recovery in recent years.

Fitness First Chief Executive Oren Peleg told London newspaper The Sunday Telegraph “the success of the transformation has meant that people have started to pay attention to the business and it has been approached by a number of parties who have expressed interest.”

Harris Williams is looking at Fitness First’s 73-club strong UK business while HSBC is assessing the company’s operations in Asia, India, Australia and Germany.

Financial analysts suggest that the appointment of two banks to look at the different divisions suggests a break-up is the most likely outcome.

Peleg conceded that “even though the business was acquired as a whole, does it make sense to actually look at the options that exist for every market?”

However, the gym chain chief insisted that no decisions have yet been made, indicating it is possible Oaktree may decide against a deal. Oaktree, Fitness First’s biggest shareholder, and Marathon Asset Management took control of the company four years ago through a debt for equity swap.

The gym business had been saddled with about £600 million (AUS$1,122 million) in debts and in the UK was forced to undertake a Company Voluntary Arrangement, a type of insolvency that companies turn to when faced with administration. Since then, it has sold-off a host of clubs, revamped existing sites and started to open new locations.

It currently has 319 gyms, including 67 in Australia, 84 in Germany, 95 in Asia (including 17 in Singapore and eight in India).

Peleg said businesses in the UK and Australia are now enjoying robust growth while Asian growth is mainly being driven by the opening of new clubs.

The turnaround has been driven by a $490 million investment program to push the chain more upmarket. That overhaul is now largely complete and a change in leadership at Fitness First last June sparked speculation Oaktree was eyeing an exit. Andy Cosslett, who had been Chief Executive, switched roles with Peleg to become Chairman.

Top image shows Fitness First's The Zone.

23rd June 2015 - FITNESS FIRST TO INVEST $20 MILLION IN AUSTRALIAN CLUBS

23rd January 2014 - HOLLYWOOD MAGIC AND AEROBICS HERITAGE UNDERPIN FITNESS FIRST RELAUNCH

22nd January 2014 - FITNESS FIRST AUSTRALIA REVEALS NEW APPROACH TO FITNESS

12th August 2013 - $130 MILLION GLOBAL INVESTMENT TO BOOST FITNESS FIRST BRAND

17th November 2012 - JOBS CUT AT FITNESS FIRST AUSTRALIA AS UK PARENT COMPLETES RESTRUCTURING

 


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