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, 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  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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