Esporta aims to see off Duke Street with cost cuts

Esporta, the health and fitness club operator, yesterday repeated its rejection of a hostile £133m bid from Duke Street Capital, saying the private equity firm's offer was not high enough.

The war of words between the two sides has intensified throughout the bid battle that reached day 39 yesterday.

Esporta, which runs 38 luxury health and fitness clubs under brands such as Riverside and Racquets, outlined its own plan to reduce costs and grow the business through new openings. It added that earnings before interest, tax, depreciation and amortisation have increased 21 per cent to £12.9m in the first half of the year. It is targetting £6m of annual cost savings and revenue enhancement.

Duke Street criticised Esporta for failing to disclose its pre-tax profits for the period and said profits would be reduced by a £2m charge to implement the cost cutting and a £2.3m charge in relation to the impairment of Esporta's Swedish assets.

Esporta has rejected Duke Street's offer of 80p a share as a "nil premium" proposal. The group's shares closed unchanged at 83.5p as the market bet on Duke Street lifting its offer.

Duke Street said: "Esporta continues to make light of the problems it faces. Its defence is based on some questionable short-term measures which risk further damaging the company's long-term prospects." The bidder said its offer amounted to a 57 per cent premium to Esporta's share price prior to bid speculation.