Cannons Group, the fitness and leisure chain controlled by UK private equity firm Royal Bank Private Equity, yesterday withdrew its £203m offer for rival fitness chain Holmes Place, citing a recent downturn in performance by the business. Holmes confirmed yesterday that it would not meet profit forecasts.
Other bidders to potentially pick up the baton include UK private equity houses Bridgepoint Capital and Cinven. Bridgepoint made an indicative offer of £177m in late July and is looking at the situation ‘with interest’. However, a source close to the transaction said that Bridgepoint Capital and Cannons are likely to be the only bidders for the business.
In a statement to the London Stock Exchange, Holmes Place said that the company was considering other options including an anticipated revised offer from Cannons. However, it is thought unlikely that a new offer would be recommended by the board: “[A revised] proposal is likely to be at a price below the company’s current share price. The board believes that it is unlikely that such a proposal would offer full value to shareholders.”
News of the deal collapse and worse-than-expected trading data sparked major selling of Holmes Place shares. The shares are currently trading at 105 pence, almost 50 per cent below the original offer from Cannons. Prior to the announcement yesterday, the shares were trading at 170 pence.