LA Fitness has confirmed it is in advanced talks with private equity group MidOcean Partners regarding the sale of the company, which could value the chain at £100m.
The announcement follows months of speculation since December 2004, when LA Fitness said it was reviewing a number of approaches.
Chair of LA Fitness, Peter Jacobs, said the potential recommended cash offer of 220 pence per share would be in the best interests of the group and its shareholders. He said it represented “a fair and reasonable proposal in the light of the challenging and competitive trading conditions which LA Fitness, and the industry as a whole, has experienced since the end of January this year and the outlook for the rest of the financial year.”
Made after extensive negotiations, the offer would entail the executive directors retaining an ongoing equity involvement in the business.
The company made the announcement with its interim results, in which it reported a rise in pre-tax profits of 13.5 per cent to £4.2m. Earnings before interest, tax and depreciation (EBITDA) increased by 11.6 per cent to £9.6m, from £8.6m.
The group opened two new sites during the period bringing the total to 69 clubs, and while it plans to open new sites in the future, no further openings are anticipated for the remainder of this financial year.
Membership numbers at the end of the period were 195,550 compared to 196,900 in January 2004 and 200,470 in July 2004.
While pleased with overall results for the six months to 31 January 2005, the company said the results for January, February and March were below the board’s expectations resulting in a less positive outlook for the remainder of the year. Despite this, the company is confident of a satisfactory result year-end result.
