Leonard Green & Partners and TPG to acquire Life Time Fitness in $4bn deal

May 2015 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

Life Time Fitness, Inc. and Leonard Green & Partners and TPG have announced that they have entered into a definitive merger agreement under which affiliates of Leonard Green & Partners and TPG will acquire Life Time in a transaction valued at more than $4bn.

Under the terms of the agreement, the investors will acquire all of the outstanding shares of Life Time Fitness common stock for $72.10 per share in cash. This price represents a significant premium to Life Time’s closing share price of $41.60 on 22 August 2014, the most recent trading day before the company announced that its board of directors and senior management team had initiated a process to explore a potential conversion of real estate assets into a REIT.

Founded in 1989 and based in Los Angeles, Leonard Green & Partners is one of the nation’s preeminent private equity firms. Leonard Green invests in established companies that are leaders in their markets, including The Container Store, Shake Shack, Whole Foods Market, Topshop, J.Crew, Jetro Cash & Carry, Activision, CHG Healthcare and Petco.

“Life Time is a differentiated market leader with a long history of consistent performance and significant growth potential,” said Jonathan Coslet, chief investment officer at TPG. “We are excited to partner with Bahram Akradi and his team on the next chapter of the Company’s growth.”

As ‘The Healthy Way of Life Company’, Life Time Fitness helps organisations, communities and individuals achieve their total health objectives, athletic aspirations and fitness goals by engaging in their areas of interest. As of 16 March 2015, the company operated 114 centres in the United States and Canada.

“Following a comprehensive review by Life Time’s board of directors of strategic alternatives to enhance shareholder value, we are pleased to have reached this agreement, which provides our shareholders with immediate and substantial cash value representing a significant premium to our unaffected share price,” said Life Time chairman, president and chief executive, Bahram Akradi, who will remain in his role and has committed to make a rollover investment of $125m in Life Time common stock. “There are no words to describe my gratitude for the confidence and significant commitment Leonard Green & Partners, TPG and LNK Partners have made to Life Time and our management team.”

Life Time’s board of directors unanimously approved the agreement and recommended that the company’s shareholders vote in favour of the transaction.

“We look forward to working with Bahram Akradi, the Life Time management team and all of its talented and passionate employees,” said John Danhakl, managing partner of Leonard Green & Partners. “We are confident that we will have a long and successful partnership as we continue to serve Life Time’s many loyal members and customers.”

Guggenheim Securities and Wells Fargo Securities are serving as Life Time’s financial advisers and Skadden, Arps, Slate, Meagher & Flom LLP and Faegre Baker Daniels LLP are serving as legal advisers. Latham & Watkins LLP is serving as legal adviser to Leonard Green & Partners and Ropes & Gray LLP is serving as legal adviser to TPG. Fully committed debt financing is expected to be provided by affiliates of Deutsche Bank Securities Inc., Goldman, Sachs & Co., Jefferies, BMO Capital Markets, RBC Capital Markets, Macquarie Capital and Nomura, which also are serving as financial advisers to Leonard Green & Partners and TPG. Kirkland & Ellis LLP served as legal adviser to LNK Partners.

The deal, subject to approval from Life Time’s shareholders and other customary closing conditions, is currently expected to close in the third quarter of 2015.

Fraser Tennant