Life Time Fitness, Chanhassen, MN, has acquired four clubs from Lifestyle Family Fitness, St. Petersburg, FL, which is closing most of its other clubs in Indiana and Ohio. The deal could involve as many as nine clubs.
Life Time is acquiring two of Lifestyle’s 10 clubs in the Columbus, OH, area (Henderson and Pickerington). Of the remaining eight Columbus clubs, Lifestyle is closing six of them (Downtown Columbus, Northeast Columbus, New Market, Gahanna, Polaris and New Albany).
Geoff Dyer, founder and former CEO of Lifestyle Family Fitness, will take over as owner of the remaining two Ohio clubs (Hilliard and East Columbus), which will be rebranded. The new name of the clubs has not been announced. Dyer will continue to be an investor in Lifestyle and serve on its board of directors.
Life Time also acquired two of Lifestyle’s four clubs in the Indianapolis area (North Meridian and Fishers) while Lifestyle is closing the remaining two (Greenwood and Keystone). Discussions about the future of the six Lifestyle clubs in North Carolina are taking place, but Lifestyle says no changes have been finalized, although Life Time also has shown interest in that area.
None of Lifestyle’s remaining 35 clubs in Florida are affected by the transactions.
In a statement released today, Life Time announced that it will acquire and operate up to nine Lifestyle clubs. That leaves five of the North Carolina clubs as possibilities, with the remaining club likely closing or being sold to another owner.
Terms of the transaction, expected to close next month, were not disclosed.
“Consistent with our long-held strategy, the acquisition and operation of these clubs, which are similar to our existing, smaller-format Life Time centers, brings an infill opportunity to markets in which we already operate large Life Time destinations,” Bahram Akradi, Life Time chairman, president and CEO, said in a statement. “We are excited to extend our Healthy Way of Life programs, services and certified experts to a new base of members as we further expand in these current Life Time markets via this agreement. Once we absorb the integration costs associated with this transaction, we expect the acquisition to be neutral to slightly accretive to our 2012 earnings.”
Lifestyle Family Fitness Chairman Stuart Lasher announced the acquisition to his employees in an email today.
“As many of you know, many of the Lifestyle clubs in Ohio, Indiana and North Carolina were opened during a very difficult economic environment,” Lasher said in the email. “Low-cost competition was on the rise, and consumer sentiment was on the decline. Behind the scenes, we struggled with high rents, difficult advertising conditions, low traffic, and, despite the best of efforts from our teams in these markets, limited success.
“Over the past two years, we’ve tried many things to turn these markets around, including, most recently, some fairly aggressive rent concession negotiations. Unfortunately, we have not been able to position these markets for success.”
Lasher went on to say that Life Time has expressed interest in acquiring the Lifestyle clubs in Ohio, Indiana and North Carolina for the past several months.
Lifestyle has been shopping its clubs for a while, according to a source. It was rumored that 24 Hour Fitness, San Ramon, CA, had interest in acquiring Lifestyle, but that rumor was shot down by a source at Lifestyle.
The effective date for the changes is Nov. 30. Employees of the closed Lifestyle clubs are being told that Nov. 30 also will be their last day of employment. Employees at the Life Time-acquired clubs will have an opportunity to work there.
Lasher said Lifestyle has made a commitment to its Florida clubs, including immediate improvements and upgrades to equipment, front desks and locker rooms. Lifestyle has made a $1 million investment in the renovation of its Hyde Park club. The company also has signed a three-year partnership agreement with the NFL’s Tampa Bay Buccaneers.
After opening its first club in 1982 in Lakeland, FL, Lifestyle doubled in size in 1991, then doubled again in 1995. From 2000 to 2007, Lifestyle grew from seven clubs to 40 clubs and from $12 million to $100 million in revenue. In 2005, Lifestyle purchased eight of the former California Fitness Centers in Columbus, OH, from Ray Wilson and Greg Rowe.
Lifestyle was No. 10 on Club Industry’s Top 100 Clubs list this year with a reported $102.4 million in 2010 revenue, a 3 percent decrease from the previous year.
Life Time Fitness, which operates 92 clubs, is No. 3 on the Top 100 Clubs list with a reported $912.8 million in 2010 revenue. Life Time recently reported double-digit increases in revenue percentages for third quarter 2011 and for the first nine months of 2011. It expects to generate at least $1 billion this year.