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Whelan Leads Three-Way Carve-Up Of Fitness First UK

The multimillionaire founder of JJB Sports has struck a deal to lead a break-up of Fitness First, the group that was once Britain's biggest gyms operator.

Sky News has learnt that DW Sports, headed by Dave Whelan, formally agreed to a takeover of Fitness First's UK business late last week.

The deal, which is not expected to be announced until next month, involves a three-way carve-up of Fitness First's UK operations.

DW will take on the majority of the roughly 70 sites, with The Gym Group and GLL, a charitable social enterprise established by Greenwich Council in south-east London during the 1990s, acquiring the remainder.‎

The takeover could spell the demise of the Fitness First brand in the UK, although the trio of buyers' plans for the assets were unclear this weekend.

Mr Whelan, who is paying about £70m for the Fitness First sites, wants to combine them with his existing chain of DW health clubs.

The enlarged group is then expected to consider a stock market flotation in a couple of years' time, following in the footsteps of other fitness chains which have listed on the London stock market.

Banking sources had previously said that Mr Whelan was keen to acquire the London and south-eastern operations of Fitness First to complement its existing geographic footprint.

Mr Whelan, the owner of Wigan Athletic FC, is a long-time business adversary of Mike Ashley, the Newcastle United owner whose Sports Direct business has also moved into the fitness club arena.

The remainder of Fitness First's operations - in Asia, Australia and Germany - are likely to be sold separately once the UK deal is completed.‎

Fitness First has been through a painful financial overhaul since it was acquired by Oaktree Capital Management and Marathon, two hedge funds, in 2012.

It shed dozens of struggling UK clubs through a mechanism known as a company voluntary arrangement in 2013, and revealed last year that profits in its home market had begun to improve after years of decline.

In total, Fitness First has more than 370 clubs and around one million members globally.

The company saw operating losses spike in the year to October 2015 and has failed to make a profit since 2012.

A potential sale of its businesses in the UK and elsewhere follows a number of takeovers in the industry, with the remainder of LA Fitness swallowed up last year by Leeds-based Pure Gym - now the biggest operator in Britain by number of clubs.

The Gym Group, which operates at the value end of the market, listed on the stock market last November and has since seen its value rise from £250m to around £260m at the close of trading in London on Friday.

GLL trades under the Better brand, operating hundreds of gyms, libraries and other leisure facilities across the UK.

The sale of Fitness First's UK operations has been handled by Harris Williams, an advisory firm.

Oaktree declined to comment, while neither DW nor Fitness First could be reached on Sunday.