Billionaire Mike Ashley’s Frasers Group (FRAS.L) said on Monday that it had acquired the fitness clubs business of DW Sports Fitness out of administration for £37m ($48m).
The gym and sports retailer, which was founded by former Wigan Athletic owner Dave Whelan, collapsed into administration earlier this month, putting around 1,700 jobs at risk across the UK.
Frasers Group, which owns Sports Direct and the Everlast brand of gyms, said the move would save “a number of jobs” at DW Sports Fitness.
Frasers will stump up at least £37m in the deal, but could end up paying almost £44m to the administrators of the company if certain conditions are met.
The deal does not include the DW Sports Fitness business name or its intellectual property, and Frasers said it would relaunch the acquired gyms under the Everlast brand.
“The transaction compliments [sic] the existing gym and fitness club portfolio within the company’s group and is consistent with the group’s elevation strategy,” Frasers said in a statement.
“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.”
DW Sports blamed the impact of the coronavirus pandemic when it announced that it had appointed BDO as administrators in early August.
While it warned that all of its 75 fitness stores were set to close, the company also said that it would work with the administrators to keep many of its 73 gym locations open.
The company said that, having “exhausted all other available options,” it believed that the administration process could allow it to restructure the business and protect the “maximum number” of jobs.
DW Sports Fitness was founded in March 2009 when Whelan purchased some 50 JJB Sports fitness clubs and retail stores for more than £83m ($108m).
The company said in April that its monthly revenue had fallen to zero overnight during the pandemic, down from an average of £15m a month.
Profits at Frasers Group, meanwhile, fell 20% last year for similar reasons, with chairman David Daly calling it “the most challenging year in the history of the company.”
Pre-tax profit in the 12 months to 26 April fell 19.9% to £143.5m ($187.6m), with the company pointing to the coronavirus crisis.
The slump in profits came even as sales rose 6.9% to £3.9bn, driven by the acquisition of brands like GAME. Excluding acquisitions and currency changes, revenue fell 12.6%.
Like other retailers, Frasers Group was forced to close its stores in March until mid-June due to the pandemic.