Life Time Fitness is in talks with two possible buyers who could take the company private, an article in The Wall Street Journal states.
The newspaper reports that Life Time, Chanhassen, MN, is talking with two private-equity groups, one of which is KSL Capital Partners LLC. KSL Capital Partners is an investor in ClubCorp, Dallas, which has been a publicly traded company since September 2013. Wall Street Journal said the other bidder was not identified. WSJ says that Life Time Fitness has a market value of $2.3 billion.
During Life Time's fourth quarter 2014 and full-year 2014 financial call last week, Bahram Akradi, CEO, noted that the company's board was reviewing strategic alternatives. Akradi noted that the company was still looking at the possible conversion of real estate assets into a Real Estate Investment Trust (REIT). The company first mentioned this possibility in August 2014. At that time, Jason Thunstrom, vice president of corporate communications and public relations for Life Time Fitness, told Club Industry that the primary business benefit of a REIT conversion would be to "create a more efficient capital structure" for Life Time Fitness.
If a REIT is created, it could essentially split Life Time into two companies. Life Time owns most of the buildings in which its clubs are situated, and officials have said creating an REIT could benefit the company and shareholders.
Town Sports International, New York, which also held its fourth quarter and year-end financial call last week, also hinted that a sale of the company might be possible.
Life Time recently settled a class action lawsuit related to the Telephone Consumer Protection Act in which the company may have to pay out up to $15 million.
It also announced last week that it would consolidate its Athletic Events Division to Louisville, CO. Life Time not only owns 113 health clubs around the country, but also operates 65 athletic events around the country.
In the financial call last week, Life Time reported its fourth quarter 2014 revenue grew 8.3 percent to $315.3 million compared with $291 million during the same period last year. Revenue for the full year grew 7 percent to $1.291 billion compared with $1.206 billion in 2013.
Life Time ranked third on Club Industry's annual Top 100 Clubs list last year, reporting 2013 revenue of $1.206 billion.
A report on Equities.com yesterday noted that Life Time was trading low on unusually high volume. Its stock closed yesterday at $57.83. The report also noted:
"The stock saw 515,671 shares trade hands over the course of the day on 2,942 trades. Given that the stock’s average daily volume over the last month has been 281,572 shares a day, this represents a pretty substantial spike over the norm."
Today, the stock closed at $57.67. The company's 52-week high was $61.08. Its 52-week low was $38.01.