Fitness First in takeover talks

Gym membership has not grown fast enough

The health club chain Fitness First has said it is in talks which may lead to a takeover offer for the firm.

Reports have suggested that private equity firm Cinven is preparing a £340m bid for the company in a deal which would involve a management buyout team.

News of the talks came as Fitness First unveiled pre-tax profits before one-off items of £24.1m, up from £20.6m the previous year.

The company said in November that it was investigating the possibility of a sale, after being hit by weak growth and increased competition.

News of the takeover talks led to Fitness First's share price climbing 14.5p to 148p in morning trade.

Fallen star

Fitness First stunned the stock market in October when it issued a profit warning.

It blamed its problems on slower-than-expected membership growth, and added that its rapid expansion programme had stretched resources.

The company trimmed jobs and scaled back its expansion plans.

But Fitness First's chief executive Mike Balfour said on Thursday that the company's future remained bright.

"We continue to believe that the outlook for the health and fitness industry remains attractive," he said.

Sector troubles

"The group remains in strong financial health and the board is confident that the prospects for Fitness First remain good."

Fitness First is not the only firm in the sector to have run into problems.

Earlier this month rival Holmes Place said it was in talks with a potential buyer.

Esporta was bought by Duke Street Capital last July, while the Cannons chain was taken private in 2001.