Deal of the Week: Leonard Green/TPG to Buy Life Time Fitness for $4B
Announcement Date March 16, 2015 Acquirer Leonard Green & Partners and TPG Capital Acquirer Description Private equity firms Target Company Life Time Fitness, Inc. (NYSE: LTM) Target Description Builds, and operates sports and athletic, professional fitness, family recreation, and spa centers for organizations, communities, and individuals Runs 114 fitness centers in the United States and Canada Founded in 1990 and headquartered in Chanhassen, Minnesota Target Financial Mkt Cap: $2.7 billion LTM EBITDA: $373.2 million Statistics EV: $3.9 billion LTM EV / Revenue: 3.0x LTM Revenue: $1.3 billion LTM EV / EBITDA: 10.5x Price / Consideration Price: $4 billion Consideration: Cash Acquirer Advisors Deutsche Bank, Goldman Sachs, Jefferies, BMO Capital Markets, RBC Capital Markets, Macquarie Capital and Nomura Target Advisors Guggenheim Securities and Wells Fargo Rationale Life Time and other fitness‐center operators are facing increasing competition from lower‐cost gyms and studio‐based exercise programs, such as CrossFit and SoulCycle. Life Time reported $114 million in net income for 2014, down from $121 million the previous year Life Time said in August it would explore a conversion into a real estate investment trust after posting second‐quarter profit that trailed analysts’ estimates and cutting its sales forecast Deal Points The private equity firms will pay $72.10 a share in cash, a 7.3% premium to Life Time Fitness’s closing price on Friday The offer is also a 73% premium to the company’s closing price on Aug. 22, the day before Life Time Fitness said it had begun exploring corporate financing options The consortium of buyers also includes LNK Partners, a previous investor in the company, and the chairman and chief executive of Life Time Fitness, Bahram Akradi, who will roll over about $125 million worth of the stock he already owns Of Note The leveraged buyout is the latest done together by TPG and Leonard Green, which have banded together to buy J. Crew and Petco The deal is expected to close by Sept. 30, pending approval by the company’s shareholders The deal would be the year’s biggest LBO
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