Planet Fitness Inc (NYSE: PLNT) jumped more than 5.0% in the stock market this morning after announcing a new acquisition that it said will boost its earnings by more than 10% in 2022.
Transaction to complete in Q1 of 2022
Planet Fitness on Tuesday said it will buy Sunshine Fitness for $800 million in cash and stock. The franchisee operates over 100 of its fitness clubs in the United States.
The deal that is likely to complete before the second quarter of 2022 will help Planet Fitness expand its footprint across more geographies. In the press release, CEO Chris Rondeau said:
Owning corporate stores is an important part of our strategy, as it gives us both relevancy and credibility when making decisions that impact the entire system. Joining our corporate teams will enhance our corporate store leadership and capabilities.
According to Planet Fitness, it will fund the agreement via existing cash on hand. It will also issue securitized notes and use the proceeds to complete the transaction.
Who will oversee operations?
The Hampton-headquartered company said Shane McGuiness – the chief executive of Sunshine Fitness, will oversee operations of the combined corporate store portfolio. CEO Rondeau added:
Following this purchase, we will own more than 200 corporate stores, or approximately 10 percent of our total system, allowing us to retain our asset-light business model, which is an important part of our shareholder value proposition.
Planet Fitness had 15.2 million members at the end of fiscal 2021 and 2,254 stores after opening 132 new locations during the financial year. Last week, the fitness chain said it was yet to see a significant hit from the Omicron-related concerns.
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