British billionaire Richard Branson’s Virgin Group is mulling an acquisition of Bally Total Fitness Holding Corp. as a way to expand the Virgin fitness club business in the United States, the New York Post reported on Tuesday.
Executives at Virgin’s health club unit, Virgin Active, have been examining Bally’s financial reports and received a ”pitch book” on the company, put together by JPMorgan and The Blackstone Group, the paper said, citing anonymous sources.
A Bally spokesman could not immediately confirm the report and a Virgin spokeswoman could not be reached for comment.
In December, Bally’s, which recently finished restating several years of earnings, hired the firms to help explore strategic alternatives, including a possible sale.
Virgin Active is part of Branson’s Virgin Group, which includes 51 percent of the Virgin Atlantic airline, financial services, a music retail chain and Internet and mobile phone services.
Last year, Branson paid about $237 million to buy back the 55 percent stake in Virgin Active that it sold to London-based buyout firm Bridgepoint Capital three years ago, the Post said.
Chicago-based Bally could fetch more than $12 a share, or $1.2 billion including debt, the Post reported. The company recently emerged from a contentious proxy battle that culminated in its two largest shareholders nominating their candidate to Bally’s board of directors in January.
The dissident shareholders, which charged Bally management with shirking their fiduciary duties to shareholders, also sought to oust Chief Executive Paul Toback.
The new director, Don Kornstein, was named co-chair of a committee that is reviewing strategic alternatives.