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Home» Health»Ardent Leisure sells health clubs

Ardent Leisure sells health clubs

Saheli 19 Aug 2016 Health Comments Off on Ardent Leisure sells health clubs 245 Views

The listed Ardent Leisure Group today unveiled a surprise deal to sell its health clubs division, comprising Goodlife Health Clubs and Hypoxi, to private equity house Quadrant for $260 million.

The group, led by businesswoman Deborah Thomas, has also offered up its marinas for sale in a deal worth over $100 million, and although it is yet to close that deal, investors liked the health club exit, driving up the shares 13 per cent to $2.60 in early afternoon trade.

Ardent said that sale of the health clubs would enable it to become a high growth, global leisure and entertainment business, handling about 20 million customer visits across Australasia and the US this year.

“The sale of the Health Club division at a premium to book value underlines the board’s commitment to actively manage the group’s portfolio of assets and consolidate the group’s position as a leading global entertainment company,” Ardent Leisure chairman Neil Balnaves said.

“The sale proceeds will be poured into bolstering the group’s balance sheet and allow the group to refocus us to give greater priority to the Main Event Entertainment rollout opportunity in the US.”

The $260m price comprises cash of $230m and deferred consideration of $30m in the form of vendor loan notes payable no later than two years from when the deal is completed.

The price represents a premium to the carrying value of the division’s net assets and a

transaction multiple of 14.9 times fiscal 2016 earnings before interest and tax.

The vendor loan notes total about $30m and will be issued by Quadrant but will carry no interest coupon and are subordinated to the bank debt.

The sale, on which Citi advised, follows a strategic review for health clubs division announced in March but the sale came as a surprise to analysts. Ardent said the review ultimately concluded selling the unit was the option best capable of creating maximum value.

“The sale of the Health Clubs division is completely aligned with our strategy of maximising shareholder value by ensuring capital is allocated to the highest returning opportunities in our core portfolio,” Ms Thomas said.

She flagged broader ambitions of reshaping the business as a global entertainment enterprise.

“The divestment of the Health Club division enables the group to execute on the pipeline of new high yielding Main Event Entertainment centres in the US and disciplined investment in the theme parks and bowling businesses, subject to achievement of return hurdles,” Ms Thomas said.

She added that the stronger balance sheet would give the group flexibility to consider capital management initiatives in future.

Although Ardent cited the high level of competition in the gym industry, and occasionally volatile returns, the buyer is bullish about the prospects of the clubs.

“Goodlife is one of the largest gym networks in the country, with 76 locations and a membership base that’s over 200,000 strong. We’re excited by the opportunities for this business to expand its membership base and service offering by encouraging,” Quadrant Private Equity executive chairman Chris Hadley said.

  • [Source:- The Australian]
Ardent Club's Health Leisure sells 2016-08-19
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