Fitness chains terminate merger plans
FITNESS chains Pure Gym and The Gym Group have terminated their planned merger following a decision by the UK Competition and Markets Authority (CMA) to refer the transaction to a second stage in-depth investigation.
In February, Yorkshire-based Pure Gym announced plans to merge with The Gym Group in a move to capitalise on increasing consumer demand for low-fee health and fitness club memberships.
However, in June the CMA completed a detailed inquiry into the merger before calling for an in-depth phase two investigation that was unlikely to be completed until early 2015.
The two companies agreed to halt merger talks after concluding that a protracted phase two investigation would have a detrimental effect on both businesses.
Peter Roberts, chief executive of Pure Gym, said: “We remain convinced of the merits of our proposed transaction, which would have made affordable gyms more widely available across the UK. But regulatory delays have created uncertainty that is detrimental for customers, employees and management. We have therefore decided to remain independent companies, pursuing separate, vigorous growth strategies.”
John Treharne, chief executive of The Gym Group, added: “As standalone gym-operators, we will continue to provide outstanding value to members, great facilities and excellent career opportunities for staff. Although our merger promised to build on those strong foundations, we have taken the prudent decision to terminate discussions given the lack of clarity on a timetable to completion.”
The two companies will continue to operate under their current ownership structures. Pure Gym is owned by CCMP Capital Advisors, while The Gym Group is jointly controlled 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, managing partner at Phoenix Equity Partners, said: “There are more than 6,000 gyms operating in the UK offering a variety of services, at a range of prices, to more than 7 million members. We are surprised that the CMA has concluded that a combination of two young businesses with a combined total of 110 gyms nationwide created a risk of a substantial lessening of competition.
“These two gym groups created the model that enable significant numbers of first-time users to access 24-hour, no contract health and fitness clubs at affordable prices. Looking to the future, both companies will now focus on the great opportunities that lie ahead. They look forward to continuing to offer an excellent experience to their respective members.”
Since the merger was first announced earlier this year, Pure Gym and The Gym Group have operated separately.
The decision to terminate the merger will have no impact on member services, facility operations or the terms and conditions for respective employees, the groups said.
