Low-cost operator The Gym snaps up smaller rival Lifestyle Fitness
Low-cost gym operator The Gym has flexed its muscles by snapping up 18 gyms from rival Lifestyle Fitness in a £20.5m deal.
The sites, which are owned by Competition Line UK, are in the Midlands and North of England. All staff and members will transfer to The Gym.
The move will result in the company almost doubling its growth rate this year as it is also planning on opening 20 sites in 2017.
Competition is hotting up in the gym market. This deal is unlikely to be the last as the industry consolidates further. Pure Gym bought smaller rival LA Fitness in 2015 while both David Lloyd fitness centres and Nuffield Health have been buying up Virgin Active clubs as that company focuses on its high-end sites.
John Treharne, the chief executive of The Gym and a former England squash player, said 10 of the sites would be converted to his own company’s branding as soon as the transaction closes at the end of the month and were expected to hit profitability targets in less than the normal two-year period the company aims for.
It will spend roughly £450,000 on converting each site and will consider whether to rebrand the remaining eight sites it is acquiring.
Mr Treharne said the 18 sites had a combined earnings before interest, taxes, depreciation and amortisation of £3.45m on the back of revenues of £11.1m in 2016.
The acquisition will be funded by its existing financing facilities. The company has looked to borrow an additional £10m for capital expenditure.
“Lifestyle is an excellent and complementary fit with our existing estate,” Mr Treharne said.
“These are well invested gyms in strong locations with an established membership. The acquisition strengthens The Gym Group’s position in the Midlands and North in areas where we are currently underrepresented and accelerates our expansion plan.
“The addition of these gyms is anticipated to be significantly earnings enhancing by 2019.”
The Gym started with one site in Hounslow in 2008 and is now the second largest low-cost gym owner in the market, behind rival Pure Gym.[“Source-telegraph”]