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Johannesburg – SA-listed Brait has conditionally agreed to acquire about an 80% interest in the international health club operator Active Topco (Virgin Active) for about £682m (R12.17bn).
Brait, an investment holding company whose shares are listed on the Luxembourg Stock Exchange and the JSE, said in a SENS announcement on Thursday its wholly owned subsidiary, Brait Mauritius has entered into a conditional agreement primarily with Darwin Holdings, a wholly owned subsidiary of certain funds managed and advised by subsidiaries of CVC Capital Partners and Virgin Group Holdings, to acquire the 80% interest in Virgin Active.
Brait CEO John Gnodde said Virgin Active is a business that his company has tracked for many years.
Referring to Virgin Acrtive founder and multi-billionaire Richard Branson, Gnodde said “we welcome the opportunity to invest in the company, alongside one of the world’s most renowned entrepreneurs”.
Branson’s Virgin Group will retain a 20% stake in Virgin Active.
“Virgin Active’s successful track record, high cash generation and exciting growth prospects in both emerging and developed markets make this an attractive opportunity for Brait and its shareholders. We look forward to being a part of Virgin Active’s success over the long term.”
Brait’s rationale for the acquisition is that Virgin Active is “a high-quality, consumer facing growth asset, with a combination of emerging and developed market exposure”.
It added that Virgin Active is attractive to Brait for its excellent financial track record.
Virgin Active has demonstrated a double digit compound annual growth rate (CAGR) in revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) over the past 10 years. It has a strong cash flow generation, a high degree of earnings visibility and is regarded as an aspirational global consumer brand.
According to Virgin Active it has a leading position in South Africa and the United Kingdom, as well as good positions in Italy, Spain and Portugal. Virgin Active also has a presence in Thailand, Singapore and Australia providing opportunities within the fast growing Asia Pacific health club market.
Virgin Active has over 1.3 million members worldwide and generated about £630m in revenue for the year ending December 31 2014.
In February, Virgin Active reported that it was planning to list on the JSE later this year.
Branson said in a joint statement on Thursday Virgin Active is a business that he is proud to have been associated with from the very beginning – over fifteen years ago.
“While today’s transaction is testament to the huge amount the business has already achieved, we believe that its future is more exciting. We are delighted that we will continue to play a part in this alongside Brait, another long term investor with a strong track record in growing businesses,” said Branson.According to Bloomberg South Africa’s fourth richest man, Christo Wiese, owns about 35% of Brait.The acquisition is subject to the approval by the South African and Namibian competition authorities.
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