CVC Financing Virgin Active with $745M in Equity

CVC Capital Partners is financing its acquisition of health club operator Virgin Active with around 450 million pounds ($745.7 million) of equity, Reuters reported. The firm has not put any debt financing into the deal, Reuters said. When the deal closes, CVC will hold a 41% stake in Virgin Active. Richard Branson’s Virgin Group will hold the remaining 49% stake.

(Reuters) – CVC Capital Partners is financing its acquisition of a majority stake in international health club operator Virgin Active with around 450 million pounds ($745.7 million) of equity, sources familiar with the matter said.

CVC has not put any debt into the deal and it is currently undecided whether they will seek bank financing for it at a later stage, the sources said.

CVC declined to comment.

Following the transaction, which is due to complete next quarter, CVC will hold a 51 percent stake in Virgin Active while Richard Branson’s Virgin Group will remain a significant shareholder with a 49 percent stake, according to a company statement.

The purchase gives Virgin Active an enterprise value of around 900 million euros and is just under 7 times Virgin Active’s earnings before interest, tax, depreciation and amortization (EBITDA), the sources added.

As part of the agreement with CVC, Virgin Active will acquire four Australian clubs currently owned by Virgin, to mark its first expansion into the Asia-Pacific region.

The purchase comes after Virgin Active acquired gym chain Esporta in July 2011 for 77.5 million pounds, which added 53 health and fitness clubs to the Virgin Active UK portfolio.

Virgin Active is a leading health club operator with 254 clubs and 1.1 million members across the UK, South Africa, Italy, Iberia and Australia. Founded in 1999, Virgin Active has reported 11 years of consecutive double digit revenue and profit growth.

CVC manages in total over $40 billion in funds and owns 54 companies worldwide, employing approximately 400,000 people in numerous countries. Together these companies have combined annual sales of over $125 billion. ($1 = 0.603 British Pounds) (Reporting by Claire Ruckin; Editing by Jon Loades-Carter)