Mon, 24 Aug 2020 | BUSINESS SALE
Frasers Group has acquired some of DW Sports’ gyms and fitness assets from administrators, for an initial £37 million. The deal follows a bid we reported on last week and sees Mike Ashley’s Frasers Group acquire 40 leisure clubs and 31 shops. Three more leisure clubs, currently closed due to COVID-19 restrictions, have also been transferred to the group.
The deal price could rise to £43.9 million if Frasers is able to acquire certain leaseholds on the properties. The transaction does not include the DW Sports brand name or intellectual property, with Frasers saying they will develop the business under its Everlast brand.
According to DW’s administrators BDO, the chain operated 72 leisure clubs and 50 retails stores at the time of its collapse. Several stores had already been closed prior to its administration earlier this month and a further 19 stores and 29 clubs have been closed since then, administrators said. However, BDO added, some of these closed locations may be reopened by Frasers “in due course”.
BDO Business Restructuring Partner Graham Newton said: "We are pleased to have achieved a sale of a significant part of the DW Sports business as a going concern, as this will not only secure employment for the majority of employees, but should also result in a return to the Company's creditors in due course."
In its financial reports, filed last week to the year ending April 26 2020, Frasers Group said it had suffered “the most challenging year in the history of the company”, as the group’s underlying pre-tax profits fell 18 per cent to £117.4 million. Total group revenues fell from £3.7 billion in 2019 to £3.9 billion, following a number of acquisitions.
Mike Ashley said that his objective was to move Frasers Group’s entire leasehold estate to turnover-based rents and added that store closures would be likely if certain landlords didn’t agree to these terms.
Regarding the acquisition of DW Sports, Frasers Group said: “The transaction complements the existing gym and fitness club portfolio within the company’s group and is consistent with the group’s elevation strategy. Frasers Group looks forward to elevating the gym and fitness assets acquired pursuant to the transaction under the group's existing iconic Everlast brand, and is also pleased to have saved a number of jobs."
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