Mike Ashley’s Frasers Group has acquired the gym and fitness chain DW Sports in a deal potentially worth up to £44m.
DW Group, founded by the former Wigan Athletic owner Dave Whelan, fell into administration last month, putting 1,700 jobs at risk. The group operates 73 gyms and 75 shops across the UK.
Frasers Group, which also owns Sports Direct, House of Fraser, Evans Cycles and Flannels, is to pay an initial cash consideration of £37m for “certain assets” of the business. The overall deal, which excludes the DW business names and intellectual property, could be boosted by up to a further £6.9m, depending upon how many of the property lease holdings Frasers Group acquires.
“The transaction complements the existing gym and fitness club portfolio within the company’s group and is consistent with the group’s elevation strategy,” the company said. “Frasers Group looks forward to elevating the gym and fitness assets acquired … under the group’s existing Everlast brand.”
For the year to the end of March, DW’s accounts show the business had assets worth £194m but ran up a loss of £20m.
Last week Frasers Group threatened to close stores if landlords did not agree to move to rents based on sales figures, saying that Brexit and the coronavirus pandemic had led to “the most challenging year in the history of the company”.
Underlying pre-tax profits for the group fell by 18% to £117.4m in the year to 26 April. Sales at its core sports business decreased 14.6%, but edged up 0.7% including the contribution from the digital gaming group Game, which is now part of that division.
Total group revenues increased from £3.7bn to £3.9bn after a number of acquisitions including Game, Sofa.com and the fashion brand Jack Wills.
Shares in the group rose more than 13% to 347p as analysts said Frasers had weathered the pandemic well, benefiting from higher demand for sportswear, bikes and casual clothing in the shift to working from home.