Viva Leisure's Strategic Investment in World Gym Australia: A Growth Opportunity
VVA (VVA) Share Update December 2024 Monday 9th
Viva Leisure Expands with Strategic Investment in World Gym Australia
Viva Leisure (ASX: VVA) has announced a strategic investment in World Gym Australia, marking a significant expansion in its fitness network.
Instant Summary:
- Viva Leisure acquires 25% stake in World Gym Australia for $16.7 million.
- Investment includes three World Gym locations in Queensland.
- Viva Leisure secures an option to acquire the remaining shares within 36 months.
- Integration of Viva's technology solutions across World Gym locations.
- Expected additional revenue of $12.5 million and $4 million in EBITDA from the investment.
Investment Overview
Viva Leisure has entered into a binding agreement to acquire a 25% stake in World Gym Australia (WGA) for approximately $16.7 million. This investment includes the acquisition of three World Gym locations in Queensland.
The transaction is part of Viva's strategy to expand its presence in the big-box fitness market. WGA is a significant player in this segment, with 47 locations currently open and 13 additional licenses sold.
Strategic Rationale
The investment will allow Viva to implement its technology solutions, such as Viva Pay and The Hub, across the WGA network. These integrations are expected to add $140 million in system-wide sales annually.
Viva will also have the option to acquire the remaining shares of WGA within 36 months, providing a pathway for further expansion.
Financial Implications
The investment is expected to generate an additional $12.5 million in revenue and $4 million in EBITDA annually. The transaction is fully funded through existing cash reserves, bank facilities, and a small component of VVA scrip.
Growth Opportunities
Viva has also entered into a joint venture with WGA's founders to establish new World Gym locations. This partnership will further diversify Viva's portfolio and strengthen its position in the fitness industry.
This strategic investment is likely to enhance Viva Leisure's market position and financial performance. The integration of Viva's technology solutions into WGA's operations could lead to significant revenue growth and operational efficiencies.
Investor Reaction:
Analysts are optimistic about the potential synergies and growth opportunities arising from this investment. The strategic alignment with WGA is expected to be beneficial for Viva's long-term growth strategy.
Conclusion:
Investors should consider the potential benefits of Viva Leisure's strategic investment in World Gym Australia. The company's focus on technology integration and market expansion could drive future growth and shareholder value.