Private equity firms buy gym Life Time Fitness for $4 billion

Gym operator Life Time Fitness, Inc. will be acquired for $4 billion by private equity firms Leonard Green & Partners and TPG Capital. Other key investors, according to a news release, include LNK Partners and Bahram Akradi, Life Time’s chairman, president and CEO.

The company has 114 gyms in the U.S. and Canada, including two in the Kansas City area and one in St. Louis. The deal would be the year’s biggest leveraged buyout that takes a company private, according to a Bloomberg News report.

Life Time’s board of directors unanimously approved the transaction, and it recommends shareholders vote in favor of the deal. The acquisition is expected to close in the third quarter of 2015.

Jason Thunstrom, vice president of corporate communications at Life Time, said he expects no downsizing as a result of the purchase. “We believe it’s business as usual for Life Time,” Thunstrom said. “We expect no change whatsoever as a direct result of this announcement.”

Missouri has been the target of rapid expansion for another gym chain, Planet Fitness. In April 2014, Planet Fitness announced a franchisee would open 21 gyms in the Kansas City area. In December, another Planet Fitness franchisee announced plans for 11 facilities in the St. Louis region.

“There are many different health club or gym models,” Life Time Fitness’ Thunstrom said. “We’re really focused on the total holistic health of the person — not just having a roomful of equipment, but rather having a suite of assessments and testing including a metabolic profile. Not just to apply a formula that everybody applies to themselves, but rather to come up with an individualized nutrition and exercise program that helps them achieve their goals.”

Steven Wieczynski, an analyst with St. Louis-based brokerage and investment banking firm Stifel, said that investors should capitalize on the offer of $72.10 per share.

“Given we see the potential for a competitive bid as highly unlikely and view the proposed offer as fairly valued, we would encourage investors to lock in gains today on the post-privatization announcement run up and look to deploy their capital elsewhere,” Wieczynski said.

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