By: Niels Gronau
Pure Gym and The Gym Group terminate merger plan
Pure Gym and The Gym Group, the pioneers of affordable high-quality fitness clubs in the UK, announced the termination of their planned merger following a decision by the UK Competition and Markets Authority (CMA) to refer the transaction to a second stage in-depth investigation.
In June, the CMA completed a detailed first phase inquiry into the merger, and initiated an in-depth phase II investigation that was unlikely to be completed until early 2015. The two companies agreed to halt merger talks after concluding that a protracted phase II investigation would have a detrimental effect on both businesses.
Peter Roberts Chief Executive of Pure Gym, said: "We remain convinced of the merits of our proposed transaction, which would have made affordable gyms more widely available across the UK. But regulatory delays have created uncertainty that is detrimental for customers, employees and management. We have therefore decided to remain independent companies, pursuing separate, vigorous growth strategies."
John Treharne Chief Executive of The Gym Group, added: "As standalone gym-operators, we will continue to provide outstanding value to members, great facilities and excellent career opportunities for staff. Although our merger promised to build on those strong foundations, we have taken the prudent decision to terminate discussions given the lack of clarity on a timetable to completion."
In a joint statement, Tom Walker, UK Managing Director of CCMP Capital Advisors (UK) II Limited, and David Burns, Managing Partner at Phoenix Equity Partners, said: "There are more than 6,000 gyms operating in the UK offering a variety of services, at a range of prices, to more than 7 million members. We are surprised that the CMA has concluded that a combination of two young businesses with a combined total of 110 gyms nationwide created a risk of a substantial lessening of competition."
Source: Pure Gym and The Gym Group