Holmes Place to merge with Virgin Active

Holmes Place, the UK's most upmarket fitness brand, is to disappear later this year following a deal agreed with Sir Richard Branson's Virgin Active health clubs chain. Holmes Place will this week announce that it has agreed to merge its UK operation with Virgin Active's business.

In time, the combined operation is to be floated on the London Stock Exchange, though the IPO remains at least 18 months away.

Virgin has appointed the investment bank UBS to conduct a refinancing of the enlarged health club chain once the merger has been sealed. Under the takeover, some 46 Holmes Place gyms across the UK will be re-branded under the Virgin Active logo. The deal follows Virgin's acquisition of 13 Esporta clubs in the UK and Spain last year.

Bridgepoint Capital and Permira - the private equity companies that acquired a controlling stake in Holmes Place for £210m in 2003 - are to hang on to the clubs located outside the UK.

As part of the deal to merge the UK operation with the Virgin business, the private equity players will receive a stake in the enlarged business of between 12 and 15 per cent.

The deal will reunite Bridgepoint and Virgin Active as business partners. In 2002, the venture capital company invested £110m in the Virgin gym chain to help fund the expansion of the business in areas such as Italy, Spain and South Africa. Sir Richard bought back the stake in a deal worth £134.5m last year.

The enlarged business will be the second largest chain in the UK behind the rival Fitness First. It will have more than 70 clubs and around 350,000 members. Virgin Active achieved a £33m profit before tax last year and is expected to help improve the financial prospects of the Holmes Place gyms, which have struggled in the UK.

However, while there has been speculation that a deal between Virgin Active and Holmes Place could pave the way for an almost immediate £1bn flotation, a person familiar with the situation said such a deal was unlikely for at least 18 months.

Consolidation in the saturated UK health club sector has been anticipated for some time given the highly competitive market conditions. Fitness First was purchased by the private equity company BC Partners last year for £835m. Some chains, including Virgin Active and Holmes Place, have also looked overseas to drive growth in less crowded markets.

For Sir Richard, the move to consolidate in the UK health club sector follows the sale of Virgin Mobile to NTL earlier this year. NTL will rebrand its business under the Virgin logo early next year after striking a licensing arrangement with Sir Richard as part of that deal.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Training Coordinator - Financial Services

£32000 - £38000 per annum + benefits: Ashdown Group: A highly successful, inte...

Recruitment Genius: Business Development Executive - Affiliates & Partnerships

£20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor