Sydney-based Ardent Leisure Group has today agreed to acquire seven Western Australian health clubs from Zest for $4.2 million.
The acquisition will complement Ardent's existing health club, Goodlife, located at Westfield Carousel.
Ardent said today the acquisition includes five purpose built clubs - Bibra Lake, Joondalup, Kingsway, Mt Lawley and Cannington - and two short-term leases at Osborne Park and Melville Plaza.
"The Group will upgrade the portfolio with an initial investment of $1.2 million in the current financial year together with a further $900,000 investment in equipment upgrades in the year ended June 2011," Ardent chief executive Greg Shaw said.
The acquisition plus capital investment costs represents a multiple of 3.5 times forecast for earnings in financial year 2011.
Mr Shaw said the acquisition was an important strategic step for Ardent to provide Goodlife with a strong position in the WA market.
"The acquisition will strengthen our health club platform to enhance earnings growth during the forecast economic recovery," he said.
"The Western Australian market is currently less competitive than the Eastern States and the acquisition will provide a cost effective entry point for us to add new centres in future years."
The acquisition will be funded by $1 million cash and the balance to be paid in Ardent shares.
Completion of the acquisition is anticipated to be next month.
Shares in Ardent were down 2.5 cents to $1.795 at 11:36 AEDT.
