Expanding Virgin Active to buy gyms from Esporta UK chain

VIRGIN Active yesterday revealed plans to step up its UK expansion with the purchase of 55 gyms, move which will almost double its size.

The £77.6m deal to buy Esporta’s UK chain is its first major acquisition since the group bought Holmes Place almost five years ago.

The operator of 71 fitness clubs in the UK said it is stepping up its pace of growth after a year of growing sales and profits.

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Virgin, which is majority-owned by Sir Richard Branson, described trading in 2011 as strong after it grew membership to more than one million for the first time.

If the deal is approved by the Office of Fair Trading it is expected that the Esporta gyms will be rebranded under the Virgin banner within two years.

Virgin, which currently has 194 clubs worldwide, said its UK business will have around 430,000 members and revenues of more than £325m. Virgin previously bought 10 clubs from Esporta in the UK in 2004 and 2005 and another six in Spain.

Virgin Active chief executive Matthew Bucknall said: “The location of Esporta’s clubs is an excellent fit with our estate and significantly strengthens our business.

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“We have been able to sustain this growth over the last three years when economic conditions have been difficult and we continue to see excellent prospects for future growth in all our territories.”

Esporta, whose 35 health clubs and 20 racquet clubs are used by 159,000 members, was bought out of administration by Société Générale in June 2009.

The chain claims to have improved its performance since then under new management, which has turned around a decline in membership.

Virgin said its results for 2010 showed its resilience to the tough economic environment.

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Revenues increased 14 per cent to £445.2m after the group opened seven new sites in South Africa, the Iberian Peninsula and Italy.

Earnings before interest, tax, depreciation and amortisation increased 13 per cent to £114.9m.

The group said trading so far in 2011 had been positive, with further like-for-like growth in revenues.

It plans to open another 17 clubs across its global operations over the next year in addition to the Esporta deal.

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During 2010 it spent £34.3m of capital expenditure, up from £29.3m a year earlier.

“The company is pleased to report another strong set of results, in the face of tough economic conditions,” said Virgin Active chairman Richard Baker. “The exciting acquisition of Esporta will enable us to accelerate our growth plans in the UK.”