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Sports Club Is Weighing Purchase of Gold's Gym

September 17, 1997|JENNIFER OLDHAM | TIMES STAFF WRITER

In another sign of consolidation in the fitness industry, Sports Club Co. said Tuesday that it is reviewing privately held Gold's Gym Enterprises' operations to determine whether it wants to purchase the Venice-based fitness company made famous by celebrities and sports icons that frequent its beach facility.

The companies signed a letter of intent that allows Los Angeles-based Sports Club to review Gold's books over the next two months to analyze whether an acquisition would be beneficial for Sports Club shareholders, said John Gibbons, Sports Club president.

"They have a well-recognized name and a respected franchise, and we're investigating to see if those assets can be utilized to help us provide a better product and service to our clubs," Gibbons said.

As part of an effort to appeal to the upscale fitness market, Sports Club has undertaken a string of acquisitions since it went public in 1994. The company, which operates 10 clubs nationwide with 47,000 members, also plans to build facilities in San Francisco, Washington and Boston.

Gold's, which has more than 500 franchises worldwide in addition to its Venice beach location, said a deal with Sports Club would help further its plans to expand the company.

"We've taken Gold's Gym from one gym in Venice to the largest gym chain in the world. It will take a public company to take us to the next level," said Ed Connors, chief financial officer for Gold's Gym Enterprises. Gold's has about 2 million members.

The 34-year-old Gold's hopes eventually to expand to 1,500 locations worldwide, Connors said. Sports Club's shares closed at $7.88, up 38 cents, on the American Stock Exchange.

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