Planet Fitness has agreed to acquire its franchisee Sunshine Fitness Growth Holdings in a cash and stock transaction for $ 800 million.
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According to Chris Rondeau, CEO of Planet Fitness, the deal will allow the company to diversify the geography of its current business portfolio. Sunshine Fitness operates 114 Planet Fitness clubs in Alabama, Florida, Georgia, North Carolina, and South Carolina.
“Owning corporate businesses is an important part of our strategy as it gives us both relevance and credibility in making decisions that affect the entire system,” Rondeau said in a statement. “Additionally, our corporate team will be joined by a management team that has built some of the most profitable locations in our system that will enhance the governance and capabilities of our corporate businesses.”
|PLNT||PLANET FITNESS INC.||89.62||-3.00||-3.24%|
The transaction is expected to close in the first quarter of 2022 and will benefit Planet Fitness adjusted net earnings per diluted share in the low double-digit percentage range for the year. Planet Fitness will fund the $ 425 million cash portion of the purchase price from cash and proceeds from a new series of securitized notes.
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Upon completion of the transaction, Planet Fitness will own more than 200 corporate stores, representing approximately 10% of the total system. The operation of the combined corporate store portfolio will be overseen by Shane McGuiness, Co-Founder and CEO of Sunshine Fitness.
“We look forward to joining the Planet Fitness corporate team and being a part of the brand’s next chapter and working with Chris and the wider team to drive continued success in the company’s own businesses,” said McGuiness.
The private equity company TSG Partners acquired a majority stake in Sunshine Fitness in December 2017. The company had previously acquired a majority stake in Planet Fitness in November 2012, but left the stake entirely in May 2017.
“We are pleased that we are once again becoming a shareholder in Planet Fitness through this transaction and see the company well positioned to take advantage of the considerable growth opportunities in the coming years,” added TSG Managing Director Michael Layman.
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The deal comes about as Planet Fitness exceeded expectations for membership growth and new business growth in 2021. The company ended fiscal 2021 with 15.2 million members, an increase of 1.7 million over the past 12 months, and opened 132 new stores in a total of 2,254 locations worldwide. Currently, 98% of Planet Fitness stores are open, including 100% of its US locations.
“The silver lining of the pandemic is that it opened people’s eyes to the importance of fitness and overall health, and we are seeing members who visit our stores visit more often than in the past to show their dedication to improving theirs To demonstrate health. “Remarked Rondeau. “For our brand there is an enormous, long-term unused opportunity to get people off the couch. For this reason, as a leading company in the fitness industry, we are making this strategic investment in the future.”
Planet Fitness shares rose 5% during Tuesday’s trading session following the announcement.