The two PE-backed UK fitness chains are merging in a bid to expand.
Budget fitness chain Pure Gym has agreed a merger with The Gym Group, another private equity-backed ‘no frills’ gym provider, in a deal designed to capitalise on the demand for lower-cost, more flexible gym memberships.
Financial terms of the deal have not been disclosed.
Together, Pure Gym, which is owned by CCMP Capital Advisors, and The Gym Group, owned by Phoenix Equity Partners and Bridges Ventures, will look to rapidly expand their network of budget gyms. Both chains operate 24-hour facilities that don’t tie customers into contracts.
“Customers want total flexibility and value-for-money options when it comes to keeping fit,” said John Treharne, chief executive of The Gym Group, in a statement. “This enlarged business, combining great facilities and excellent trainers, will provide a compelling alternative to existing gym providers.”
Pure Gym was founded in 2009, and now operates 61 gyms across the UK, with one site in Northern Ireland. CCMP bought a majority stake in the firm last year.
The Gym Group was founded in 2007 by Bridges, the impact-driven investor. By 2012, the business had 37 branches, and was planning to open 18 to 20 new sites per year between 2013 and 2015.
Bridges made a partial exit via a sale to Phoenix last June for almost £100 million ($165 million; €122 million), a deal that the firm said would help The Gym finance its expansion plans. Bridges realised a 50 percent IRR and a 3.7x return on its original investment, but rolled £21 million of equity back into the business to leave it with a 25 percent stake.
“We are delighted to be supporting the creation of a fast-growing gyms network, which is poised for further expansion as the fitness market continues to evolve in the UK,” said Tom Walker, UK managing director of CCMP Capital Advisors, and David Burns, a partner at Phoenix Equity Partners, in a joint statement.
Health and fitness has been a popular sector with private equity recently. Last September TDR Capital agreed a £700 million takeover of David Lloyd Leisure. Two months later London-listed 3i took a stake in European budget chain Basic-Fit for €110 million.
The merger is still pending regulatory approval.