The Gym Group is to buy 13 sites from easyGym in a deal worth £20.6m, with an additional £4.1 million being paid once lease extensions are agreed on two of the sites.
easyGym currrently has 16 locations, with another under development.
Speaking to Health Club Management magazine in March this year, easyGym CEO Paul Lorimer-Wing announced the company would pivot to a franchise model and target overseas expansion, with the aim of being in 10 countries by 2020 saying: “Through franchising, we want easyGym to become the leading big box, low-cost gym brand in the world by number of countries.”
The Gym Group acquisition will be part-funded by a £24m equity placing and part from the company’s banking facilities, with the deal expected to complete by 20 July.
Gym Group CEO, John Treharne said: “The easyGym portfolio of 13 well-invested gyms is highly complementary to our existing estate. We’re confident they will integrate quickly and easily into our business while enhancing our position in the low-cost market in London and extending our spread across the UK.
“We have a significant opportunity to increase each gym’s membership through a focus on member service, investment in facilities and through offering our premium pricing proposition – LIVE IT.
“This acquisition accelerates our expansion plans for 2018, as we advance towards our goal of 200 gyms by 2020,” he concluded.
The deal will give the Gym Group the opportunity to increase membership numbers, as easyGym’s current average levels are running at 4,850 members per site, against 5,477 for the Gym Group’s mature locations.
Eight of the sites are in London, with the remainder around the country. The locations being acquired had site EBITDA (excluding central costs) of £4.3 million in the 12 months to 31 March 2018, with revenues of £12.9 million.
The two sites requiring lease extensions will have the right to continue to use the easyGym brand, with the other 11 sites being rebranded.
The company says “post-conversion maturity” will be reached in a “shorter timeframe” than with a new-build, with conversions expected to cost £275,000 per location – lower than the recently acquired Lifestyle sites, which have been costing £470,000 per location. The Gym Group is anticipating a 20 per cent return on capital at maturity.
easyGym staff are expected to transfer to the Gym Group
If the acquisition falls through, the Gym Group says it will retain the proceeds of the placing for potential investment opportunities.
John Treharne announced recently he will hand over the CEO role to CFO Richard Darwin and take on a non-exec role. The transition will happen in September this year.
Source: Leisure Opportunities