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Canberra-headquartered gym and health club group Viva Leisure (ASX: VVA) is stretching its way into new disciplines after acquiring a 34 per cent stake in Boutique Fitness Studios (BFS), the Australian and New Zealand master franchisee for Xponential Fitness's (NYSE: XPOF) brands Rumble Boxing, Club Pilates, StretchLab and CycleBar.
The binding agreement for a $2 million stake in BFS may be just a warm-up for Viva Leisure, with the deal also including an option to acquire up to 100 per cent of the Western Australia-based company for $5.8 million plus an earn-out based on net studios opened and sold.
BFS currently has 48 studios in operation and a further 25 set to open over the next 12 months, which compares to 342 facilities across the Viva Leisure group including owned and franchised locations for the brands Club Lime, Hiit Republic, Plus Fitness, Rebalance and Groundup.
The news follows a net profit increase of 19.7 per cent to $10.6 million for Viva in FY24, after revenue rose by 15.9 per cent to $163 million. The group's number of members for owned locations crossed the 200,000 mark for the first time, and reached 372,354 across all locations.
BFS is expected to generate system-wide sales of approximately $25 million over the next 12 months.
"The investment into BFS expands Viva's network to over 400 locations across multiple disciplines and brands, enhancing our diverse offering while simultaneously introducing a new market for Viva Pay and other Viva technologies," says Viva Leisure CEO and managing director Harry Konstantinou.
"We look forward to working with BFS founder and CEO Matt Gordin and his team, and the wider Xponential Fitness team to grow the brands in Australia and New Zealand."
Xponential's links to Australia also extend to Body Fit Training, whose international intellectual property it acquired for $60 million in 2021.
"We are excited to see Boutique Fitness Studios take the next step in its evolution by joining forces with Viva Leisure," says Xponential Fitness president of international Bob Kaufman.
"The Australian market is an important strategic region for Xponential's brands, and we look forward to seeing this drive further growth for Club Pilates, StretchLab, Rumble Boxing, and CycleBar."
Boutique Fitness Studios CEO Matt Gordin says he couldn't be happier to partner with "Australia’s fastest growing and most diverse fitness group".
"This partnership will allow us to continue to grow our team to support our franchisees. The synergies and platform that Viva brings will help drive our brands forward and our studios to grow stronger and more profitable," says Gordin, who is currently a substantial shareholder in the group.
At the time of publication, Viva Leisure is yet to respond to requests for clarification of whether Gordin will continue to be a substantial shareholder. In its announcement, the company says its share purchase will simplify the existing share register and it will become the largest shareholder.
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