Esporta courts broader PE interest

The UK fitness and leisure chain is reported to have spoken to a number of private equity firms about backing a possible MBO as it seeks to rebuff Duke Street Capital's hostile offer.

Esporta, the UK listed fitness and leisure chain currently fighting a hostile takeover from Duke Street Capital, is believed to be exploring options beyond rejecting the private equity-backed public-to-private offer.

According to a source close to the firm, Esporta – which rejected an offer of 80p per share for the company at the end of May, saying it ‘materially undervalues’ the company – is speaking to a number of UK private equity firms with a view to launching an MBO.

The private equity firms approached by Lazard, Esporta’s advisors, are understood to include 3i, Royal Bank Private Equity and Electra Partners. The source said that Esporta has sought to start an auction for the company in order to achieve a price which it sees as being more representative of the company’s value.

However, it is thought that there has been little interest shown by the three firms, which have not previously focussed on the leisure and fitness sectors. The firms were also put off by the fact that Duke Street Capital already holds a 25 per cent stake in the firm.

Peter Taylor, a managing director at Duke Street, earlier said that he believed the choice now facing Esporta shareholders was between “certain cash today or an uncertain turnaround.”

Esporta finance director Michael Ball said the present Duke Street offer, which values the company at £133m plus debt, fails to take into account recent improved trading performance, coupled with an increase in new members and a £5m cost savings programme implemented earlier this year.

None of the three private equity firms has so far been available for comment. A spokesman for Esporta declined to comment.