Planet Fitness Inc., Hampton, New Hampshire, is acquiring Sunshine Fitness Growth Holdings LLC, which owns 114 locations in the Southeast United States, the company announced.
The acquisition, which is expected to close this quarter, is a cash and stock transaction valued at $800 million.
Under the terms of the agreement, Planet Fitness expects to fund the cash portion of the purchase price through the proceeds from a new series of securitized notes issued under its existing securitization financing facility and from available cash on hand.
Sunshine Fitness was the first franchisee in the Planet Fitness system and has been backed by TSG Consumer Partners since 2017. Sunshine Fitness operates locations in Alabama, Florida, Georgia, North Carolina and South Carolina. The locations will be combined into the current Planet Fitness company-owned portfolio, which is predominantly located in the Northeast.
Upon closing of the transaction, Shane McGuiness, co-founder and CEO of Sunshine Fitness, who has been an owner and operator in the Planet Fitness system for nearly 20 years, will oversee operations of the combined corporate store portfolio.
"We are excited to announce the acquisition of Sunshine Fitness, one of our best-performing franchisees in the system, with locations that will provide geographic diversity to our current corporate store portfolio and that are in markets with a long runway for future store development," Planet Fitness CEO Chris Rondeau said in the announcement. "Owning corporate stores is an important part of our strategy, as it gives us both relevancy and credibility when making decisions that impact the entire system. Additionally, joining our corporate team is a management team that has built some of the highest store-level profit generating locations in our system which will enhance our corporate store leadership and capabilities."
After the purchase, Planet Fitness will own more than 200 corporate stores, or approximately 10 percent of its total system, which will allow the company to retain its asset-light business model, Rondeau said. Doing so is an important part of Planet’s shareholder value proposition, he added.
"We are pleased that through this transaction we will once again be a shareholder in Planet Fitness and believe it is well positioned to take advantage of the significant opportunities for growth in the years ahead," TSG Managing Director Michael Layman said.
TSG's involvement with the Planet Fitness brand dates back to November 2012 when TSG acquired a majority stake in Planet Fitness. In August 2015, Planet Fitness began trading publicly on the New York Stock Exchange. TSG fully exited its investment in Planet Fitness in May 2017, and in December 2017, TSG acquired a majority stake in Sunshine Fitness.