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Essex: The Gym Group and Pure Gym abandon merger plan after referral for competition probe

16:14 16 July 2014

A generic photo of people working out in a gym.

A generic photo of people working out in a gym.

Archant

Two gym operators have abandoned a £300million merger after their proposed tie-up was stalled by an in-depth competition probe.

Pure Gym and The Gym Group wanted to create a new low-cost player with more than 100 sites but have ditched the move because the investigation by the Competition and Markets Authority will last until next year.

The pair said in a joint statement that the referral of the deal for a full inquiry was unjustified, adding that the delay would be detrimental to their businesses.

Pure Gym, which launched in 2009, operates 68 24-hour gyms across the UK, with members paying monthly with no contract commitment. A majority stake in the business was acquired last year by funds affiliated with CCMP Capital Advisors.

The Gym Group, founded in 2007, runs 42 sites across Britain, including sites in Colcheter, Chelmsford and Norwich, and also operates a low-cost business model with contract-free membership. Phoenix Equity Partners bought a majority stake the business last year.

The two private equity firms said in a statement: “There are more than 6,000 gyms operating in the UK offering a variety of services, at a range of prices, to more than 7million members.

“We are surprised that the CMA has concluded that a combination of two young businesses with a combined total of 110 gyms nationwide created a risk of a substantial lessening of competition.”

Since the merger was first announced in February, the two businesses have continued to operated separately.

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