Consumer Sector Comment – June 2015

Dato

The gyms space is an area which has been particularly active over the past 12 months, with signs of both increasing cross-border and domestic consolidation. In late 2014, low cost German operator McFIT Fitness acquired Italy-based Happy Fit as it sought to increase its dominance in the European fitness industry. Last month, Nordic PE group FSN Capital acquired Danish health club chain Fitness World – a key player in the Danish gyms market. Fitness World had previously acquired Condizione, a Polish health club operator, at the start of 2015. With reported revenues of c. €130m in 2014, Fitness World has 450,000 members in Denmark across 152 clubs as well as 3,000 members across 5 clubs in Poland.

Meanwhile, in one of the largest deals in the sector, South Africa’s Christo Weiss acquired an 80% stake in Virgin Active in April through his investment company Brait. (Brait has subsequently gone on to acquire fast fashion retailer New Look – see deals section below.) Virgin Active, headquartered in the UK, has 267 gyms in 9 countries with its largest number of clubs located in South Africa. The group had previously considered an IPO on the Johannesburg Stock Exchange.

In the UK, the decision by Pure Gym and Gym Group to call off their proposed merger in mid-2014 following intervention from the UK’s competition regulator has certainly not slowed things down. This month, Pure Gym won the battle to acquire LA Fitness. The deal will see the budget chain’s sites increase from 98 to more than 130 across the UK – subject to regulatory review.

There has been plenty of other trade and private equity activity in the sector:

  • Encore Capital has acquired 37 Degrees, a luxury health and fitness operator, from Albion Ventures. This transaction came a couple of weeks after Encore’s acquisition of The Third Space, an operator of two luxury health and fitness clubs, from Graphite Capital. The clubs, both based in London, have in excess of 5,000 customers. Encore already owns the Reebok Sports Club in London – Europe’s largest luxury health club, occupying 100,000 sq. ft. in Canary Wharf;
  • NorthEdge private equity backed the MBO of Total Fitness, which has 17 clubs based in the north of the UK, in March;
  • Towards the end of 2014, leading sports retailer Sports Direct announced that it would open a chain of 200 low cost gyms and has applied for planning permission to convert a nightclub into a 30,000 sq. ft. gym and retail complex in Scotland.

Clearwater International is active in the gyms sector, having advised UK boutique gym chain Gymbox in a deal which saw the Business Growth Fund invest €12.6m for the brand to continue site roll out across London and other UK cities. The team has also advised O2 Centro Wellness, a Spain-based group of fitness centres, on restructuring financial obligations. Further action is expected!

 

Selected UK Consumer Deals

LDC private equity has agreed to acquire Away Resorts Ltd, the holiday park owner and operator, in a secondary buyout transaction from CBPE Capital. Clearwater International advised the vendors.

South Africa-based private equity firm Brait, along with the management team and founding family of New Look Group Ltd, has acquired the company in a secondary management buyout transaction from Apax Partners and Permira. The transaction gives an EV of €2.7bn.

AS Adventure Group, a portfolio company of French private equity firm PAI Partners, has acquired Snow & Rock Sports Ltd – which operates under three brands: Snow + Rock, CycleSurgery and Runners Need – from LGV Capital Ltd.

Booker Group plc has agreed to acquire Budgens plc and Londis (Holdings) Ltd from Musgrave Group plc for a cash consideration of €56m.

US-based private equity firm TPG Capital has acquired a majority stake in Poundworld Retail Ltd. Poundworld has about 280 stores under the Poundworld and Bargain Buys brands.

Listed Finnish consumer products group Fiskars Corporation has signed a definitive agreement to acquire WWRD Holdings Ltd and its portfolio of home brands, including Waterford, Wedgewood and Royal Doulton, from KPS Capital Partners. Fiskars will acquire WWRD for €402m in cash, on a debt-free cash-free basis.

Risk Capital Partners has bought a majority stake in Zoggs, the UK-based swimwear brand. This transaction is the first investment by Risk Capital Partners in the sporting goods market.

SABMiller plc has agreed to acquire Meantime Brewing Company Ltd, the UK-based beer manufacturer, for an undisclosed consideration. The acquisition includes Meantime’s retail sites including the Tasting Rooms and the brewery shop in Greenwich, the Greenwich Union pub, the pop-up Beerbox pub and the Brewery Fresh tank beer concept.

Kings Park Capital has acquired Specialist Tours Ltd – the UK-based tour operator specialising in historical and archaeology tours – from Panoramic Growth Equity, backed by the management of Specialist Tours Ltd, for an undisclosed consideration. Specialist Tours had a turnover in excess of €11m in the year 2014.

Palatine Private Equity, along with the management of cocktail bar and restaurant chain The Alchemist Bar & Restaurant Ltd, has acquired the company in a management buyout transaction for a consideration of €18m.

Michelin has acquired Blackcircles.com Ltd, an online retailer of tyres, for a total consideration of €70.5m. The acquisition will help Michelin accelerate its move to develop a larger online tyre business.

Recruit Holdings of Japan has acquired a 92% stake in Hotspring Ventures Ltd. Hotspring operates an online hair and beauty appointment booking system in the UK, Germany, Lithuania, Switzerland and Austria across 12,000 salons.

The management of High Street TV (Group) Ltd, a UK-based e-retailer, has acquired the company in a secondary management buyout transaction backed by Endless. It currently runs three 24-hour shopping channels and is best known for introducing popular juicer Nutribullet into the UK market.

ECI Partners has acquired Evans Cycles in a management buyout transaction from Active Private Equity for an undisclosed consideration. Evans Cycles reported revenues of €178m for the year ended November 2014.

Zoopla Property Group plc has agreed to acquire uSwitch Ltd – a provider of online and phone-based comparison and switching services for financial and home services – from LDC, the management of uSwitch Ltd and Forward Internet Group Ltd.

Constellation Hotels Group of Qatar has agreed to acquire a 63.8% stake in Maybourne Hotel Group Ltd, owner of The Connaught, Claridges and The Berkeley hotels, from three private investors: Sir David Barclay, Sir Frederick Barclay and Derek Quinlan.

The Original Bowling Co Ltd, a portfolio company of Electra Partners which operates 10 bowling centres, has acquired Bowlplex Ltd, another operator of 10 bowling centres, from Royal Bank of Scotland Group plc.

Majestic Wine plc has acquired online wine retailer Naked Wines from WIV Wein International AG. Majestic Wine is paying a cash consideration of €70m. Majestic Wine will also issue 6,409,714 new shares valued at €28m to Naked Wines shareholders, payable as earnouts on the achievement of certain performance criteria over a maximum period of four years.