Town Sports International Holdings (TSI) announced it has entered into an agreement to acquire the studio business of Flywheel Sports (Flywheel). The acquisition is expected to close in the first quarter of 2020, upon satisfaction of customary closing conditions.
Flywheel was founded in 2010 and has since expanded to 29 locations.
“Flywheel is an iconic name in the fitness industry and this acquisition accelerates TSI’s strategic plan as we continue to upgrade our club network and offer more value to our members,” said Patrick Walsh, TSI’s chairman and CEO, in a statement. “The Flywheel acquisition fits perfectly into TSI’s strategy, as it enables us to elevate our members’ fitness experience by offering a luxury, boutique product while elevating their fitness routines, along with the benefits of additional formats and locations. We look forward to integrating and adopting Flywheel’s five-star standards and operational excellence within TSI as we raise the operational and service standards at all TSI locations. Through this acquisition, TSI plans to enhance the gym experience, similar to the industry’s aggregators, and offer more variety in content, locations and experience for a lower cost.”
According to Darren Richman, the co-founder of Kennedy Lewis Investment Management — Flywheel’s current owner — the move is indicative of recent trends in the fitness industry.
“Much has been written about the changes the fitness industry is currently undergoing,” said Richman in a statement. “As in the case of providers like Netflix who reimagined the importance of content, and the need to provide customers with more for less, we think that Patrick is following the exact same path at TSI in the fitness space. He is facilitating the delivery of more fitness modalities and content for value-conscious consumers.”
Kennedy Lewis will provide seller financing of $25 million in the form of a second lien loan, in addition to assisting with the refinancing of TSI’s existing term loan, with a follow-on commitment of up to $25 million of additional second lien debt.
As part of the acquisition, members of TSI will gain access to Flywheel’s boutique facilities through packaged membership options; and Flywheel customers can expect similar benefits.
