JJB Founder Whelan Pounces On Fitness First

The multimillionaire founder of JJB Sports and owner of Wigan Athletic FC is in detailed talks to buy the British operations of Fitness First - once Britain's biggest gyms operator.

Sky News has learnt that DW Sports, headed by Dave Whelan, has entered a month-long exclusivity period to secure a £70m takeover of Fitness First's UK business.

Mr Whelan is understood to want to retain roughly three-quarters of the roughly 70 sites, with buyers from the health and fitness sector being lined up to take on the remainder.

The Fitness First sites would be combined with Mr Whelan's existing 70-strong chain of DW health clubs, with the enlarged group expected to consider a stock market flotation in 2018 or later.

The sports tycoon has several weeks within which to secure a deal, and his intention to press ahead with the acquisition of a business dependent upon the buoyancy of consumer spending will be closely watched given widespread forecasts of a recession in the wake of last week's EU referendum result.

Banking sources said that Mr Whelan was keen to acquire the London and south-eastern operations of Fitness First to complement its existing geographic footprint.

He has seen off competition from a number of rivals, including OpCapita, the controversial former owner of Comet, and Advent International, whose efforts are being aided by Andrew Cosslett, Fitness First's former chairman and chief executive.

Mr Whelan is a long-time business adversary of Mike Ashley, the Newcastle United owner whose Sports Direct business has also moved into the fitness club arena.

The remainder of Fitness First's operations - in Asia, Australia and Germany - are likely to be sold separately once the UK deal is completed.

Fitness First has been through a painful financial overhaul since it was acquired by Oaktree Capital Management in 2012.

It (Other OTC: ITGL - news) shed dozens of struggling UK clubs through a mechanism known as a company voluntary arrangement in 2013, and revealed last year that profits in its home market had begun to improve after years of decline.

In total, Fitness First has more than 370 clubs and around one million members globally.

The company, which has yet to release results for 2015, racked up combined pre-tax losses of almost £100m in the two previous years, partly because of the costs associated with its financial restructuring.

A potential sale of its businesses in the UK and elsewhere follows a number of takeovers in the industry, with the remainder of LA Fitness swallowed up last year by Leeds-based Pure Gym – now the biggest operator in Britain by number of clubs.

Pure Gym is examining a flotation but has postponed it in the wake of Brexit-related stock market turbulence.

The Gym Group, which operates at the value end of the market, listed on the stock market in November and has since seen its value rise from £250m to around £300m before plunging in recent days.

Fitness First and Oaktree declined to comment.