Whitbread to sell David Lloyd gyms
David Lloyd operates a number of gyms in the UK
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Monday, 04, Jun 2007 08:54
Whitbread has agreed to sell its chain of David Lloyd gyms in a bid to cut its debt and focus on its food and hotel businesses.
Versailles Bidco, an acquisition company owned by private equity firm London & Regional Holdings and the Bank of Scotland, are to buy the health clubs for £925 million.
Announcing the deal in a statement yesterday, Whitbread said the sale price represented a multiple of 13.4 times earnings before interest, taxes, depreciation and amortization (Ebitda) of £68.8 million for the year to March 1st.
Whitbread bought the David Lloyd chain from the former professional tennis player of the same name in 1995.
David Lloyd Leisure (DLL) now operates 60 clubs in the UK and Ireland, including 45 tennis centres. The company - which boasts more than 370,000 members - also has seven clubs in the Netherlands, one in Spain and one in Belgium.
The sale comes after previous takeover approaches Whitbread said it received over David Lloyd in the autumn of 2005, when its parent company changed the chain's management and launched a two-year recovery plan in order to improve the performance of the business.
Whitbread says that David Lloyd membership has now increased and that margins have also improved as a result of changes made by the business' new management, who have introduced fresh initiatives to promote use of the clubs outside of peak hours.
The leisure company now wants to sell the chain following a review of the business and in light of "approaches" it has received for David Lloyd. Whitbread stressed it wanted to "crystallise" upon the material increase in the value of the operation which has been realised as a result of the recovery programme, on behalf on shareholders.
"Following the success of the management action taken in DLL over the last 18 months and a review of the health club market, we have decided that this sale represents excellent value for our shareholders," said Whitbread chief executive Alan Parker.
"Whitbread is now well placed to deliver the ambitious growth plans for its hotels, restaurants and coffee shops," he added.
Whitbread, which owns the Costa Coffee, Premier Travel Inn and Beefeater chains, said that proceeds of the sale would initially be used to service its debts.
The David Lloyd deal is expected to be completed on August 2nd.