Pure Gym buys rival LA Fitness in £80m deal

The deal will see the brand's number of sites grow from 98 to more than 130
The deal will see the brand's number of sites grow from 98 to more than 130
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LOW-COST gym operator Pure Gym has acquired smaller rival LA Fitness in a deal understood to be worth up to £80 million.

The firm, which last year called off a planned £300m merger with Gym Group due to the prospect of a “protracted” investigation by the competition watchdog, said the deal will “extend the availability of affordable fitness centres to people across Britain”.

It will see the brand’s number of sites grow from 98 to more than 130 – after accounting for the possibility that the future of a handful may be uncertain following scrutiny by competition authorities.

Chief executive Humphrey Cobbold said: “This transaction represents a good deal for members of both Pure Gym and LA Fitness as well as other consumers that are hungry for more affordable fitness options.

“Overall demand for affordable, high quality, and no-contract fitness centres is continuing to grow, served by a range of providers in a highly competitive market-place. With the addition of the LA Fitness sites, Pure Gym will continue to innovate with new facilities, technologies and services for our existing and prospective members.”

The value of the deal was not disclosed, but is understood to be worth between £60m and £80m.

Pure Gym, majority owned by private equity firm CCMP Capital Advisors, has 98 sites across the UK, including ten in Scotland. The firm, launched in 2009, offers non-contract 24-hour access to its fitness clubs.

LA Fitness has 43 venues, mainly in London and the south-east of England. Unlike its new parent, the company operates on a contract model, with membership costing from £30 a month.

Most of the LA Fitness sites will be re-branded to become part of the bigger chain, subject to regulatory approval. In addition, Pure Gym said it planned to expand by adding about 30 new sites this year.

Pure Gym said it had been “working constructively” with the Competition & Markets Authority (CMA) and the transaction has been submitted for review.

The company was founded with two clubs in Leeds and Manchester in 2009. It now has more than 520,000 members. In 2013, private equity firm CCMP Capital Advisors bought a majority stake in the business. LA Fitness has more than 123,000 members.

Yesterday’s takeover came a month after Sir Richard Branson and private equity partner CVC agreed to sell a majority stake in fitness chain Virgin Active to a South African investment firm for £682m.

The deal with Brait valued the business at some £1.3 billion and will see Branson retain a 20 per cent holding, excluding a separate stake owned by the gym company’s management.

Brait, an investment vehicle of the retail magnate Christo Wiese, also bought a 90 per cent stake in the New Look fashion chain earlier this month.