News :
Gym group Fitness First starts sprinting to £800m sell-off
TIMES ONLINE, June 26 2005 -- One of
the world’s largest gym chains, Fitness First, is warming up for a possible
£800m sale.
The leisure group has appointed UBS, the investment bank, to conduct
a strategic review, with a sale seen as the most likely outcome.
The move comes two years after Fitness First was taken off the stock
market in a management buyout backed by Cinven, the private-equity firm.
It is another sign that private-equity houses are seeking quicker exits
from their investments.
On Friday, CVC Capital Partners, another private-equity
firm, announced the £800m sale of the car-repair chain Kwik-Fit to rival
PAI after owning it for less than three years.
Traditionally, firms held investments for between five
and seven years, but this is changing and three years has become more
normal. Exits that take place in less time than this are often referred
to as “quick flips”.
In the short time that Cinven has owned Fitness First,
the business’s profits have almost doubled.
Cinven paid a little over £400m, including almost £200m
of debt, to take control, but hopes the business will fetch more than
£800m, including debt, if it decides to sell.
A deal would provide a windfall for Michael Balfour, who
founded the business in 1993 and is its non-executive deputy chairman.
There would also be large sums for other members of the management,
led by Mike Metcalf, who became chief executive last August.
A successful exit would vindicate the hardline stance taken
at the time of the buyout by Ruth Keattch, the Deutsche Asset Management
fund manager. She was an investor in Fitness First and refused to sell
her stake to Cinven because she felt there was no need for the business
to be taken off the stock market at the offer price.
Deutsche Asset Management retains a 10.2% stake in the
privately-owned company. It is not yet clear how the fund will unwind
its position, but Deutsche is fully supportive of Cinven’s decision
to seek an exit.
One potential bidder is Forstmann Little & Co, an American
buyout firm, which last month paid $1.6 billion (£877m) to acquire the
24-Hour Fitness chain. “They are a natural fit,” said one leisure analyst.
Balfour and his business partner Christopher Pearce opened
their first health club in Bournemouth but today Fitness First stretches
around the globe. It has about 430 clubs in 15 countries, including
Australia, Malaysia, Spain and Thailand, and has more than 1m members.
LA Fitness recently became the last major quoted chain
to go private in a buyout backed by Mid Ocean Partners. Its new owners
are keen to expand the business.
All parties that are taking part in the Fitness First review
declined to comment.
A 50% stake in the company that owns Thomson, Britain’s second-biggest
publisher of directories, could soon be up for sale for more than £2.5
billion, writes Mark Kleinman.
BC Partners, CVC Partners, Permira and Investitori Associati, are understood
to be discussing plans to sell their stake in Seat PG, a firm that is
listed on the Italian stock exchange and owns directories all over Europe.
(source : www.timesonline.co.uk)
