British health and fitness chain, Virgin Active could be mulling a possible sale of its business. The Richard Branson majority owned company is reported to be in talks with potential private equity firms that might buy the business at an estimated £1 billion.
Reports emerged Sunday in London’s Sunday Telegraph that the Branson Company had already met a number of buyers and might be selling the business. According to the newspaper, Virgin Active is believed to have gone into the preliminary stages of deliberations over the sale but a formal auction is yet to be commenced.
Virgin Active, the UK based 187-club firm may as well be keen on a possible floatation of its shares but was currently sitting through the market volatility before making such a move. Richard Branson, owner of the Virgin Group owns 76% of the gym chain company. Amongst some of the private equity firms the newspaper reported to be interested in the deal are Kohlberg Kravis Roberts & Co., Advent International, CVC Capital Partners and Blackstone.
Virgin Active is the UK’s second largest gym company and has other global operations in Italy, Spain, Portugal and South Africa. Should the reports be true, the private equity firms will be vying for a business that has steadily been expanding globally, with about 71 gym chains in the UK and an additional number overseas, an opportunity for further expansion may be availed.
Virgin Active is being advised over the sale by Goldman Sachs. The expected listing on the London stock exchange may have begun in 2007 when Branson had then said he was considering floatation but the plans were shelved after the tumble in the markets with the global financial meltdown.
Virgin Active was begun in 1999 and the rest of its 24% stake is held by the administration team together with private equity firms namely Bridgepoint and Permira. Bridgepoint and Permira got their stakes in Virgin Active through the sale of the Holmes Place fitness chain in the UK to Virgin back in 2006. Should the deal go through, Richard Branson will retain about 50% stake in Virgin Active in the new ownership arrangement.
Virgin Active currently has almost one million members and operates 187 health fitness clubs, having faired impressively in the face of the global financial meltdown and reported a 15% growth in earnings to £391 million in 2009, increasing its core earnings to an 18% increase, peaking at £101 million. Virgin Active declined to offer any comments over the speculations.
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