Cinven considers taking Holmes Place private in £151m buyout

Holmes Place yesterday became the latest fitness club operator to flirt with delisting from the stock market after it revealed that its chief executive was exploring a management buyout with support from Cinven, the venture capitalists.

The group, which has seen its share price collapse over the past 12 months on tougher trading conditions, said Allan Fisher, the chief executive, and Lee Ginsberg, the deputy chief executive, were considering taking the group private after receiving an approach from Cinven.

James Hollins, a leisure analyst at WestLB Panmure, suggested an offer would probably be at about 150p per share, valuing the group at £151m. This would see the management win control of the group for little more than its flotation price of 128p per share in 1997. News of the possible bid sent the group's shares 20 per cent higher to close at 149.5p.

The move comes as Duke Street Capital, a private-equity group, presses ahead with its £133m bid for Esporta, a rival health club group. It follows last year's £360m MBO at Cannons.

Esporta, which like Holmes Place has suffered from over ambitious expansion plans, has rejected Duke Street's offer as "materially undervaluing" its business. Both groups operate clubs at the premium end of the fitness market, which analysts have signalled could suffer from an economic slowdown.

The health and fitness sector, a relative newcomer to the stock market, has slipped out of favour with investors, sending once giddy ratings on companies like Fitness First tumbling. Mr Hollins said the move by Holmes Place showed the board was "hugely frustrated" with the collapse in share price. "Overall, the clubs are trading satisfactorily. [The management] believe in their long term potential and are clearly saying 'either give us a re-rating or we'll buy ourselves out'."

Holmes Place operates 63 clubs, including 16 in continental Europe.