Holmes Place back in private hands

Holmes Place, the fitness club operator that has issued five profits warnings in less than 12 months, prepared to limp away from the public arena yesterday after clinching a takeover deal worth only 25p-a-share.

The group, which came close to agreeing a 200p-a-share deal with rival Cannons last autumn, is being bought by Bridgepoint and Permira, two private equity houses. It warned investors that without a sale, it was in effect insolvent.

The deal, which reunites Holmes Place with its original backer, Bridgepoint, ends a catalogue of woes for the health club chain that started last July when Allan Fisher, the group's chief executive and co-founder, put the business up for sale. The group has been dependent on its bankers since January, when it first breached its financial covenants.

Mr Fisher, who would have netted £21m from the Cannons deal, will make £2.54m from the sale, while Lawrence Alkin, his co-founder and a non-executive director, will make £4.06m instead of £32m under the Cannons deal. Both are understood to be investing their windfalls in the delisted business. The existing management will hold 5 per cent.

Charlie Troup, a partner at Permira, said he saw opportunities to expand Holmes Place in Europe over the next few years. The private equity groups are investing £130m of equity, of which £87m will go towards slashing the company's £185m debt mountain.

Yesterday's deal comes hot on the heels of a £204m management buyout at Fitness First. It leaves LA Fitness, worth £31m, as the only significant listed operator.