In a deal that involves two of the biggest names in the health club industry, 24 Hour Fitness, San Ramon, CA, will acquire 32 Bally Total Fitness clubs in New York, New Jersey, Denver and the San Francisco Bay Area, the companies announced Tuesday.
Terms of the deal, which is expected to close in the next two weeks, were not disclosed.
"Bally maintains a commitment to great service and facilities to improve the quality of life of our members," Steve Tucker, president and CFO of Bally Total Fitness, Chicago, said in a statement. "24 Hour Fitness maintains a similar focus. We are leaving these 32 clubs in capable hands."
This is the first acquisition under the new leadership of 24 Hour Fitness CEO Mark Smith and President Frank Napolitano since the company was sold by private equity firm Forstmann Little and Co. for $1.85 billion earlier this year.
"This is an important day for both of our companies," Smith said in a statement. "Our No. 1 priority will be to ensure a welcoming and smooth transition of the clubs into the 24 Hour Fitness family."
Napolitano added: "We have the best talent, resources, and operating platform to integrate these clubs seamlessly and we look forward to extending the 24 Hour Fitness brand in our core markets with this important transaction."
Moody's Investors Service said in a press release that 24 Hour's deal to purchase the Bally clubs for cash "is a credit positive for the company because it expands the company's club portfolio while slightly reducing leverage."
24 Hour Fitness, which declined to comment further about the sale, is No. 2 on Club Industry's Top 100 Clubs list this year with an estimated $1.3 billion in 2013 revenue. The company reported 413 clubs at the end of 2013.
Bally is No. 12 with an estimated $108 million in revenue, which it reported in 2012. The revenue was likely less in 2013 as Bally saw a decrease in clubs, but the company did not report 2013 figures to Club Industry.
It appears the sale will leave Bally with six remaining clubs, according to calculations from its website. Of its 38 clubs, Bally has 19 clubs in New York state, six in New Jersey, seven in the Denver area and six in the Bay Area. Likely not affected in the sale are Bally's clubs outside of the New York City metro area, including single clubs in Albany, Syracuse and Rochester, NY.
The impending sale is perhaps the final major decline in the once mighty Bally empire, which had ruled the health club world in the 1990s and into the 2000s. After two bankruptcies, Bally closed several clubs and sold a majority of others, including 171 clubs to LA Fitness in 2011 and 39 clubs to Blast Fitness in 2012.