Low cost gyms merge to create £300m empire
THE PRIVATE equity owners of two fast-growing budget gym chains announced plans yesterday to join forces, creating a £300m fitness empire that would rival the UK’s more established players.
Pure Gym is to merge with rival low-cost operator the Gym Group, in a deal that will see the new company owning more than 100 gyms across the country.
The two no-frills chains have grown rapidly since they were founded less than a decade ago, exploiting a dislike among cash-strapped consumers for higher membership fees and long-term contracts offered by traditional chains such as Virgin and Fitness First.
Pure Gym, which launched in 2009 and owns 61 24-hour clubs, was snapped up by buy-out group CCMP Capital Advisers last year in partnership with existing management for an undisclosed sum.
The Gym Group’s founder Bridges Ventures also benefited from a flurry of activity in the fitness industry last year and sold a majority stake to Phoenix Equity Partners.
The terms of the deal, which requires regulatory approval, were not disclosed but the new group is expected to be worth around £300m.
Peter Roberts, Pure Gym’s founder and the new group’s executive chairman said: “This agreed deal unites two innovative players in the fast-changing gyms sector, where the low-priced model is improving consumer choice and contributing to better exercise levels across the country.”
Gym Group’s chief executive John Treharne will retain the same role at the new company, which has yet to decide on a name.
A spokesperson said the pair have hired a branding agency but will wait for regulatory approval, expected in March, before announcing any further details.
The UK fitness market is worth around £4.2bn and has grown by around 6.2 per cent a year since 1995. However, the low-cost gym sector outperformed, growing by around 30 per cent last year.
ADVISERS
JAMES TREVIS
EVERSHEDS
An army of banks, law firms and debt advisory groups have weighed in to help bring about the merger of the Gym Group and Pure Gym. Magic circle law firm Eversheds acted for the Gym Group in a team led by corporate partner James Trevis.
An old hand in the consumer and private equity sector, Trevis has worked at Eversheds since joining as a trainee 17 years ago after graduating from Cardiff university.
His relationship with the Gym Group dates back to last summer when private equity firm Phoenix brought in Eversheds to advise on its acquisition of the fitness chain.
Trevis has also recently acted for private equity firm Equistone on its £90m acquisition of dried fruit and nut supplier Whitworths and is also involved in Specsavers’ acquisition of the opticians group Healthcall.
Meanwhile Pure Gym’s owners CCMP Capital called in law firm Kirkland & Ellis to advise them on the merger while Travers Smith represented the management and Hogan Lovells acted for the banks involved. Acting as financial advisers are McQueen, KPMG and Canaccord Genuity, with director Will Bain and managing director Ed Arkus leading the team at Canaccord.