Merger of low-cost gyms will see new UK chain

Leeds-based Pure Gym and The Gym Group plan to join forces so they can increase their share of a fiercely competitive market.

The companies said there was growing consumer demand for “low-fee, high quality and flexible health and fitness club memberships”.

It is thought that the merger – which is subject to regulatory approval – will create a group worth around £300m.

Pure Gym, which launched in 2009, operates 61 24-hour gyms across the UK. Members pay monthly with no contract commitment.

Funds affiliated with CCMP Capital Advisors bought a majority stake in the business last year.

The Gym Group was founded in 2007 and operates 42 sites across Britain.

It also has a low-cost business model with contract-free membership. Phoenix Equity Partners bought a majority stake last year.

Financial terms of the merger, and the name of the new network, have not been disclosed.

The businesses will continue to operate separately until regulatory approval and completion terms are finalised.

The combined business will have 12 gyms in Yorkshire, if the merger gains approval.

John Treharne, chief executive of The Gym Group, will also head the new group.

Peter Roberts, chief executive of Pure Gym, will become executive chairman.

Mr Roberts said: “This agreed deal unites two innovative players in the fast-changing gyms sector, where the low-priced model is improving consumer choice and contributing to better exercise levels across the country.

“We expect our complementary brands and locations to encourage even more people to join gyms.”

Mr Treharne said: “Customers want total flexibility and value-for-money options when it comes to keeping fit.

“This enlarged business, combining great facilities and excellent trainers, will provide a compelling alternative to existing gym providers.”

The new company will be a combination of the current Pure Gym, owned by CCMP Capital Advisors, and The Gym Group owned by Phoenix Equity Partners and Bridges Ventures.

In a joint statement, Tom Walker, UK managing director of CCMP Capital Advisors (UK) II, and David Burns, partner at Phoenix Equity Partners, said: “We are delighted to be supporting the creation of a fast-growing gyms network, which is poised for further expansion.”

Pure Gym opened a new gym at the Merrion Centre in Leeds in early October. The gym expects to receive a boost from the vast numbers of extra visitors who are being attracted to Leeds since the opening of the Leeds Arena last year.

CCMP Capital Advisors specialises in middle market buyouts, and growth equity investments of $100m to $500m in North America and Europe.

Phoenix Equity Partners is an independent private equity fund management business, which is owned by its executive team. Phoenix focuses its investments on mid-market UK private businesses valued at up to £200m. Bridges Ventures is a specialist fund manager, which has raised seven funds which have a total £340m.

A number of private equity firms have made investments in the fitness industry in the last year.

In September, TDR Capital agreed a £700m takeover of David Lloyd Leisure, one of Britain’s biggest health club chains.

Two months later UK-listed 3i took a stake in European budget chain Basic-Fit for 110m euros ($150.1m).