LA Fitness empire for sale at £160m

LA FITNESS, the last stock market-listed chain of health and fitness clubs, has been quietly sounding out buyers and could fetch up to £160m. It would bring a multi-million pound windfall for founder and chief executive Fred Turok.

The move will surprise the market because fitness fanatic Turok, who set up the company in 1990, has been a staunch defender of his listing, which he hoped would help him to consolidate the sector.

But it is understood that he has become disillusioned with the market as a way of raising capital to fund expansion and has decided to seek a private equity buyer in a sector awash with cash.

Investors were badly burned during 2003 when the sector rapidly expanded, only for its core market to be hit by thousands of City job losses.

LA Fitness, which has 67 clubs, joined the stock market in 1999. Shares closed on Friday at 214 1/2p, valuing the business at £87.7m. But analysts said that any buyer would pay a significant premium and the company could be worth up to £160m. Turok, a 49-year-old South African who owns 16% of the business, is a gym enthusiast who tries to exercise every day.

He completed a degree in physical education before setting up on his own in 1990 when he took out a second mortgage on his home to raise the £150,000 needed to buy a failing gym in Victoria, central London.

In 1996, he bought his fourth gym, in Isleworth, Middlesex, called LA Fitness, a name he adopted for the group ahead of its listing. Several large private equity firms already own health clubs and could see buying LA Fitness as a quick way to boost their own business.

Bridgepoint Capital owns Virgin Active and Holmes Place; Duke Street Capital owns Esporta; Cinven owns Fitness First; Royal Bank of Scotland backed the management buyout of Cannons; and L&G Ventures bought Total Fitness.

Some of these names are thought to have been approached about LA Fitness over the past few weeks.