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The Potential Sale of David Lloyd Leisure
TDR Capital, the private equity firm, is considering options for its health and fitness club chain, David Lloyd Leisure. Sources familiar with the matter have revealed that the deal could potentially amount to £2 billion ($2.6 billion).
Morgan Stanley is acting as an advisor to TDR Capital for the sale of David Lloyd Leisure, and has been exploring interest from potential investors who may be interested in acquiring a majority stake in the business.
Should there be sufficient interest, TDR is expected to initiate an auction process later in the year. However, it should be noted that this is still in the preliminary stages and no final decision has been made.
Representatives from TDR and David Lloyd Leisure have chosen not to comment on this matter. Requests for comments from Morgan Stanley have yet to be returned.
A Potential Revival for the Health Club Industry
If the decision to proceed with the sale is made, David Lloyd Leisure would become one of the largest health clubs in Europe to be listed on the market this year. This marks a significant recovery for an industry that was severely impacted by the lockdowns imposed during the early stages of the pandemic.
The History and Current State of David Lloyd Leisure
TDR Capital gained control of David Lloyd Leisure in 2013 after acquiring it from the previous owners, London & Regional and Caird Capital LLP, for £750 million. TDR, having owned the company for a decade, is now seeking an exit, as a previous attempt to sell the business in 2017 did not yield any buyers.
With 131 clubs operating across the UK and Europe, David Lloyd Leisure provides a range of facilities, including swimming, spas, fitness classes, and other sports amenities. The company’s website states that it employs 8,500 staff.
Potential Buyers Enticed by Debt Structure
TDR Capital is hopeful that prospective buyers will be attracted to David Lloyd Leisure’s debt structure. The company currently has approximately £900 million of loans maturing in 2027, which are considered “portable.” This means that a new owner would not be required to secure additional debt at current interest rates to repay creditors.
Stability and Resilience in the Business
It has been reported that David Lloyd Leisure’s current EBITDA run-rate for this year stands at £225 million. This indicates stability and resilience in the underlying business model.
Reporting by Amy-Jo Crowley, editing by Elisa Martinuzzi and Sinead Cruise
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