Bally Total Fitness has entered into an agreement to sell its Crunch Fitness division for US$45m (£25m) in cash to industry veteran Marc Tasche in partnership with the private equity group of Angelo, Gordon & Co.
The sites being sold include 21 Crunch clubs in New York, Chicago, Los Angeles, Atlanta, Miami and San Francisco, as well as Bally's two Gorilla Sports clubs in San Francisco and the two Pinnacle Fitness clubs in San Francisco.
The deal is expected to close by the end of the fourth quarter of 2005 and is part of Bally’s turnaround plan, which includes the reduction of debt and the sale of non-core assets to focus the company's resources on its primary business of providing total fitness products and services to middle market consumers on a national basis.
Bally acquired 19 Crunch clubs in 2001 for approximately US$20m in cash and nearly three million shares of common stock. Bally acquired Gorilla
Sports as part of its acquisition of Pinnacle Fitness in 1998.
"Although Crunch is a prestigious brand with great potential, its high-end positioning is not consistent with our core strategy, which emphasizes strategic growth of the Bally brand and heavily focuses on the middle-market demographic," said Paul Toback, chair and CEO of Bally Total Fitness.
"When Bally acquired Crunch, our company was focused on acquisitions as the way to drive growth. Our capital now needs to be directed towards the Bally branded clubs and debt reduction."
