Whelan swoops for Fitness First UK

WIGAN entrepreneur Dave Whelan’s £140m turnover DW Sports company has acquired Fitness First UK and its 62 clubs.

The acquisition of the once struggling but now recovering company allows DW Sports to access the South East and London markets where Fitness First mainly operates.

The deal will complement the 78 DW Fitness clubs, which are primarily based in the North and the Midlands. 

DW Sports will retain the Fitness First brand and plans to build its offering and reputation through investment and support.

“We are delighted to announce our acquisition of Fitness First UK whose great reputation, enviable brand and positive culture will strengthen and broaden our offering in the South,” said Dave Whelan, owner and chairman of DW Sports.

“Fitness First has traded well since the significant investment in its brand portfolio and DW Sports intends to continue that investment while ensuring the Fitness First brand remains.”

Former professional footballer Whelan, 79, is the owner of League One club Wigan Athletic, having also been the chairman of the club for 20 years, before passing the position over to his grandson David Sharpe recently.

Predominantly based in the North West, DW Sports currently operates 78 leisure clubs and 90 retail stores.

The addition of the Fitness First clubs, which are primarily in London and the South East, will geographically extend and enhance the DW Fitness estate. DW plans to retain 48 of the acquired sites and has exchanged contracts with other operators for the disposal of 14 Fitness First sites that are not core to its future plans.

The Fitness First UK teams will remain in place and will continue to be led by Martin Seibold, managing director of Fitness First UK, who will work closely with Scott Best, managing director of DW Sports.

“We are greatly encouraged by the acquisition and feel that DW Sports shares our ethos and values,” said Seibold.

“We are proud to have transformed Fitness First over the past four years and delighted to see the brand retained by DW Sports which is both a well-known and highly respected UK fitness operator.

“The acquisition of Fitness First will allow DW Sports to invest further in innovation, upgrading and maintaining the existing Fitness First sites,” said Best.

“Our plans are yet to be confirmed but we are looking to install swimming pools in some of the larger clubs in London and are looking to continue to innovate the offering.  At the same time, we plan to invest in new openings for the brands and the continued refurbishment of our DW portfolio.”

Fitness First was put up for sale in March when Harris Williams, an independent American investment bank, and HSBC was hired by its US owner, private equity firm Oaktree Capital Management, to look at a potential sale or break-up of the health clubs business, which has gyms spanning the UK to Australia.

The gym had been saddled with about £600m in debts and in the UK was forced to undertake a Company Voluntary Arrangement. Subsequently, it has offloaded a raft of clubs, revamped existing sites and started to open new locations.

The most up to date results Fitness First available were for 2014, which showed revenues dipped 0.35% to £509.3m at constant currencies and adjusted operating profits fell by 49% to £14.9m.

However, in the UK the signs of an upturn were encouraging, with earnings before interest, taxes, depreciation and amortisation rising 1% to £8.6m, the first growth in five years.

The turnaround has been driven by a £200m investment programme to push the chain more upmarket.

The deal was managed and supported out of Manchester with KPMG and DLA acting for DW Sports, and Barclays and HSBC (represented by Addleshaw Goddard) supporting DW Sports with funding for the acquisition.

Martin Souter, relationship director at Barclays in Manchester, said: “Barclays is pleased to support its long standing customer DW Sports as sole lead arranger with the highly complementary acquisition of Fitness First UK, giving the business national coverage in its fitness division.”

Wesley Mort, HSBC’s relationship director in Manchester, said: “The fitness sector is growing rapidly and DW Sports is an ambitious business that is tapping into the opportunities that this industry has to offer.”