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Orangetheory and Self Esteem Brands are to merge to form a $3.5 billion business
29 Feb 2024
Orangetheory and Self Esteem Brands have revealed plans to merge 'as equals' creating a new company with around US$3.5 billion a year in sales and 7,000 franchises in 50 countries.
The deal will be an all-stock transaction, creating one of the largest fitness, health and wellness businesses globally. The name for the new business has not yet been revealed.
The two already share a backer in the form of private equity firm Roark Capital.
The combined portfolio of brands will include Orangetheory Fitness, Anytime Fitness, Waxing the City, Basecamp Fitness/SUMHIIT Fitness, The Bar Method, and Stronger U Nutrition.
“From our simple beginnings in 2002 with the first Anytime Fitness club, we’ve enjoyed rapid growth worldwide thanks to both the power of small-business franchising and our mix of brands that meet the ever-increasing demand for more holistic and personalized health and wellness services,” said Chuck Runyon, co-founder of Anytime Fitness and CEO of Self Esteem Brands. “With this merger, we'll enrich even more people around the world through franchising, community and the services they need – now and in the future – on their personal health and wellness journeys.”
"The merger will result in a significant international scale for the new company, with continued investments in data and analytics, technology, products, and services that will “help franchisees across its brands outpace growing consumer demand for holistic health and wellness services," he said.
“As we start a new chapter, Orangetheory will continue to build on our legacy of innovation and transformation,” said Dave Long, co-founder and CEO of Orangetheory Fitness. “With this groundbreaking agreement, we're one step closer to setting a new benchmark for what it means to be a global leader in fitness, health and wellness. We're excited about what our combined companies will be able to accomplish together to capture an increasing market share, unlock future growth and pioneer a healthier tomorrow for consumers around the world.”
Erik Morris, chief investment officer at Roark Capital said: “The founders and leadership teams at Self Esteem Brands and Orangetheory have built terrific brands, each with a long history of remarkable growth. We’re excited to continue to partner with the teams to create a leading global franchise platform in the health and wellness sector."
Last month, Runyon made a statement denying Anytime Fitness was up for sale, as the industry rumour mill gave hints that something was afoot.
Speaking to HCM recently, Dave Mortensen, co-founder of Self Esteem Brands, gave clear warning that the company was on the growth trail and that it would look to do this by mergers and acquisitions rather than organic growth, saying: "Within the next five years, we want to get to 10,000 units globally. Some of this will happen organically through the brands we already have, the rest through acquisition. I imagine it will be an 80/20 split, with about 80 per cent of our growth coming from our current brands and about 20 per cent from new acquisitions we bring on-board.
Mortensen said Self Esteem Brands was looking for brands with at least 100 locations, saying: "In the future, we’ll look for a bit more scale before we acquire. Some of the brands we have now came in at a smaller scale. Moving forward, I think we’ll be looking for franchise brands to already have 100+ units before we bring them into Self Esteem Brands."
Earlier this week Self Esteem Brands released year-end results celebrating a 12.3 per cent increase in revenues and plans for further expansion.
The company currently has more than 5,500 locations across seven continents. Anytime Fitness accounts for the lion’s share, but going forward there are plans to make further inroads into the personal care space, beyond pure fitness. “We’re interested in anything within the personal care space, so obviously fitness and wellness – that’s been our bread and butter – but really anything where people are investing in themselves and taking care of themselves. That’s where Waxing The City comes in,” Mortensen told HCM.
Founded in 2010, Orangetheory has around 1,540 locations in 23 countries, continuing to open even through the pandemic. The original workout was a 60-minute heart rate-based interval training class, which had been the only offering until the company tapped into the strength training boom last year with a new concept. Strength 50 uses TRX, weights, bands and bodyweight exercises to work the entire body with a focus on building strength.
Another new concept has been launched this year, Tread 50, aimed at members who want more cardio and endurance training. More details are available in the upcoming issue of HCM, where Orangetheory CEO, Dave Long, is interviewed about plans to diversify programming and build 10,000 units globally.
Sign up at here or at www.HCMmag.com/signupfor your complimentary digital edition.
The timing of the merger is subject to regulatory approvals and customary closing conditions.
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