Brunswick Corp., the parent company of Life Fitness, Rosemont, Illinois, has entered into a definitive agreement to sell its Fitness business for approximately $490 million in cash, the company announced on May 6. The Fitness business includes Life Fitness, Hammer Strength, Cybex, Indoor Cycling Group, SCIFIT and Brunswick Billiards.
The agreement is with KPS Capital Partners, LP (KPS), an investment firm focused on manufacturing and industrial companies across an array of industries.
The agreement was approved by Brunswick's Board of Directors and is expected to close during the second quarter of 2019 after receipt of regulatory approvals. In March 2018, Brunswick announced its board of directors had approved a "spin-off" of the company's Life Fitness Division into an independent, standalone, publicly traded company, temporarily known as "FitnessCo."
Brunswick reported on April 25 that the Fitness business had reported a 7.8 decrease in first quarter 2019 net sales ($225.2 million), its second consecutive quarter of revenue decline. It also reported $139.1 million in operating losses. For 2018, the Fitness business reported virtually flat revenue of $1.03 billion. When reporting the 2018 year-end results, Brunswick CEO David Foulkes had said that the declining revenue reflected a decrease in sales to value-oriented health clubs for the brand. He also noted that the company expected sales to decline in the "mid-single-digit percent" range during 2019.
"We look forward to our future with KPS and are excited about this incredible opportunity to collaborate with a firm with a tremendous track-record of working with similar companies," said Jason Worthy, president of Life Fitness. "KPS recognizes our world-class brand positioning, the value of our customer relationships, our iconic standing within the fitness industry, and our long-term earning potential. We will work closely with KPS to develop and execute a focused strategic plan centered around our mission to inspire healthier lives. We will build upon our long and successful history of product development and technology leadership, with the goal of providing the highest-quality solutions and services for a broad range of fitness facilities and fitness consumers."
Jay Bernstein, a partner of KPS, said that KPS has a track record of leveraging its capital, global platform, and commitment to investing in technology, innovation, growth, and customer service, which presents a tremendous opportunity for Life Fitness.
“We are exceedingly confident that Life Fitness will thrive as an independent company,” Bernstein said.
He noted that Life Fitness has the largest global installed base of equipment with approximately two million pieces of cardiovascular and strength equipment used regularly by more than 60 million people worldwide.
“We look forward to working with President Jason Worthy, his management team, and Life Fitness employees globally to build on this great platform and the company's strong design, innovation and product development heritage,” he said.