Ardent Leisure Group has agreed to buy Fenix Fitness Clubs for $60.9 million in a move which signals further consolidation in the health and fitness sector.
The deal follows Fitness First’s recent sale of 24 clubs in a response to low-cost gyms grabbing market share.
Sources in the industry say Fitness First is desperately trying to offload some of its remaining clubs, but Ardent went for the Fenix clubs instead, seeing them as an opportunity to strengthen its group.
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Ardent already operates Goodlife gyms and Fenix’s 10 premium fitness clubs in Victoria and Queensland. Two more Victorian clubs in development stage will be rebranded to Goodlife gyms within 12 weeks.
The Fenix clubs have about 35,773 members.
The purchase will be funded through a fully underwritten $50 million equity placement and a $20 million share purchase plan expected to be completed by October 31, 2012.
Ardent chairman Neil Balnaves said the deal was a “strategic opportunity” to strengthen the position of Goodlife “in a core growth market”.
“[It] is expected to positively impact the performance of the existing club portfolio through enhanced passport benefits,” he said.
“Goodlife has consistently delivered above market membership and profit growth and will now enjoy equal No1 ranking in Melbourne with 19 clubs, together with the two Fenix clubs under development.
“Following the recent acquisition of the Fitness First South Australian portfolio Goodlife is also now well placed to capitalise on a more extensive product offering in South Australia.”
In a statement to the Australian Securities Exchange Ardent, he said the acquisition represented a strategic opportunity to strengthen one of its strongest performing operating divisions and would add to earnings both before and after synergies.
Ardent’s divisions include Dreamworld and WhiteWater World on the Gold Coast, AMF bowling alleys, marinas and the Texas-based Main Event entertainment arcades.
However, Goodlife was one of Ardent’s few successful divisions last year with earnings up 21% in comparison to Ardent’s overall 2011-12 which fell below expectations by 63%.