Landmark eyes deal for Middle East Fitness First franchise

Al Hokair Group, the Saudi Arabian leisure conglomerate, is understood to be in talks to sell its subsidiary Leisure Unlimited, holder of the Middle East franchise for Fitness First, to the Landmark Group.

United Arab Emirates-based Landmark has begun due diligence on the deal, which would see the retail giant add the Fitness First gym brand to its franchise portfolio.

A source close to the deal told Arabian Business that Dubai-based Leisure Unlimited had been starved of funding in recent months, putting pressure on its growing gym business.

Buyout talks with at least two previous firms are understood to have fallen through.

Leisure Unlimited operates more than 13 branches of Fitness First across the Middle East, including 11 in the United Arab Emirates (UAE). The gym chain is owned by private equity group BC Partners, and has 550 clubs worldwide with more than 1.4 million members in 20 countries.

BC is eyeing a stock market flotation in Asia, which is likely to value the business at around US$1.80 billion.

The Landmark deal follows a legal dispute between the UK-based Fitness First and Leisure Unlimited, which in May saw the gym chain take out an advertisement in a UAE newspaper for a new franchisee.

Leisure Unlimited is understood to have sought legal advice after the move, but the dispute has now been resolved to allow the unit to be sold with its franchise relationship intact, the source said.

Landmark Group is one of the largest retail conglomerates in the Arabian Gulf region, with more than 900 stores and some 31,000 employees.