Search Share Prices
The Gym Group raises £24m to fund acquisition of easyGym sites
The Gym Group, which operates 133 low-cost gyms, said on Thursday that it has raised gross proceeds of around £24m in a placing, which will be used to fund the acquisition of 13 easyGym sites.
The company placed just under 10m shares at 248p each, or around 7.5% of its capital. This represents a discount of approximately 0.6% to the closing price on Wednesday.
The group announced late on Wednesday that it was planning to buy the gyms for an initial consideration of £20.6m, with an additional £4.1m payable when lease extensions are agreed on two sites. In addition to the placing funds, The Gym Group will extend its banking facilities by £10m as part of the transaction, which is expected to complete on or before 20 July.
The Gym Group said the sites, eight of which are located within London, will add to its existing rollout plan for this year and drive future growth. They provide an opportunity to increase numbers closer to its mature estate level and the deal underpins its aim to reach 200 sites by 2020, it said.
Chief executive officer John Treharne said: "The easyGym portfolio of 13 well invested gyms is highly complementary to our existing estate. We are confident they will integrate quickly and easily into our existing business. In addition, they will further enhance our market position in the low cost market in London, as well as extending our geographic spread across the UK.
"We have a significant opportunity to increase each gym's membership through focus on member service, investment into the facilities and through offering our premium pricing proposition, LIVE IT., to more members. This acquisition accelerates our expansion plans for 2018 as we advance towards our goal of 200 gyms by 2020."
The company also gave an update on trading for the first five months of the year, saying it has met the board's expectations and that 2018 results should be in line with market views.
Total members as at the end of May were up 31.8% versus May 2017 at 668,000 and the group said that by the end of the first half, it will have opened six new gyms, boosting the total estate to 134 sites.
As at 31 May, 45,000 members had signed up to its premium pricing proposition, LIVE IT, representing 6.7% of the closing membership and the company said it continues to expect 15 to 20 organic openings for the full year.
At 1005 BST, the shares were up 4.6% to 260.88p.