March 16, 2015 / 1:15 PM / 5 years ago

UPDATE 3-Life Time Fitness to be taken private for over $4 bln

* Cash deal of $72.10/shr

* CEO to invest $125 mln

* Shares up 5.2 pct at $70.66 (Adds Breakingviews link)

By Yashaswini Swamynathan

March 16 (Reuters) - Gym operator Life Time Fitness Inc said it would be taken private by Leonard Green & Partners and TPG in a deal valued at over $4 billion.

Life Time’s fitness clubs, which offer activities such as racquetball and tennis as well as traditional gym workouts, have been facing increasing competition from sellers of gym equipment that can be used at home and niche workout companies such as CrossFit.

Life Time operates 114 fitness centers under its Life Time Fitness and Life Time Althletic brands in North America.

The company, under pressure from hedge fund Mercato Capital Management, said last August said it was exploring a potential conversion of its property into a real-estate investment trust.

Since then Life Time’s shares have risen 62 percent even as the company reported lower-than-expected profit for the past three quarters.

The cash offer of $72.10 per share represents a 7.3 percent premium to Life Time’s Friday close. The company’s shares were trading at $70.66 on Monday.

The offer values Marcato’s stake of 8 percent at about $225 million, according to Thomson Reuters data. BlackRock Institutional Trust is the other big investor with a stake of about 7 percent.

Life Time Chief Executive Bahram Akradi, who will remain in his role, will make a rollover investment of $125 million in the company’s stock as part of the deal, the company said. Akradi owns 6.6 percent of the company.

Other investors involved in the deal, which is expected to close in the third quarter, include private equity firm LNK Partners.

The Wall Street Journal reported earlier this month that Life Time was in advanced talks with private equity bidders. (

The paper reported that private equity firm KSL Capital Partners LLC was in the race to buy Life Time. But Stifel Nicolaus Capital Markets analysts said on Monday a competitive bid was “highly unlikely”.

Guggenheim and Wells Fargo are Life Time’s financial advisers. Skadden, Arps, Slate, Meagher & Flom LLP and Faegre Baker Daniels LLP are legal advisers.

Latham & Watkins LLP is legal adviser to Leonard Green & Partners and Ropes & Gray LLP is advising TPG.

Editing by Don Sebastian and Saumyadeb Chakrabarty

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