KKR acquires £300m stake in PureGym
Deal means low-cost fitness chain now has access to £500m to fund expansion across Europe
KKR has acquired a £300m holding in the UK’s largest gym operator PureGym, as private equity continues to sweep up stakes in British hospitality and leisure businesses during the pandemic.
The deal, which makes the US buyout firm a significant minority investor and values the company in excess of £1.5bn, according to a person with knowledge of the deal, will fund PureGym’s expansion plans across Europe.
In a statement, PureGym said it “believes the conditions are now right for significant further development of the business”. The low-cost fitness group operates 511 gyms and now has access to £500m of capital to continue its growth in the UK, Switzerland and Denmark.
PureGym, which has franchise sites in Saudi Arabia and is launching trial sites in the US, would “sustain continued international expansion over the coming years” and aimed to double the number of venues in the UK and Switzerland, the company said on Tuesday.
KKR told the Financial Times in July that it would set up a new team of UK-based dealmakers to focus on British companies, as private equity benefits from depressed valuations, partly due to Brexit and the pandemic.
Blaine MacDougald, partner and co-head of KKR’s Strategic Investments Group, said PureGym had “emerged as an outstanding performer in its sector” and was “well positioned to take advantage of the global opportunity in health and wellbeing”.
Bain Capital purchased upmarket bakery chain Gail’s in September, while Blackstone acquired Bourne Leisure, which runs the Butlin’s and Haven holiday parks, in January. Blackstone is now seeking to sell Butlin’s.
PureGym has been funded by private equity since CCMP Capital bought a stake in the company in 2013. Leonard Green & Partners then purchased a majority stake in 2017, valuing the company at £600m. LGP will retain its majority ownership position, the statement said.
The Leeds-based gym operator has grown substantially since then and acquired Danish operator Fitness World for £350m in 2020. The company appointed advisers to work on an initial public offering in August but it has now raised the capital it needs.
The decision to raise funding privately differs from the approaches of UK rival The Gym Group and Europe’s largest chain Basic-Fit, which are listed in London and Amsterdam respectively.
Humphrey Cobbold, chief executive of PureGym, said: “With health and wellbeing rising to the top of the global agenda, we now have the capital, the capabilities, the technology and the management team to become a global fitness and activity operator.”
In the quarter to September 30, PureGym reported revenues of £111m, ahead of the same period in 2019 thanks to its expanded operations, and had almost £800m in secured net debt.
Low-cost fitness has boomed during the pandemic recovery, with memberships almost returning to pre-pandemic levels at PureGym, The Gym Group and other low-cost operators. The sector remains vulnerable to changing government guidance on coronavirus, however.
The reintroduction of working-from-home measures in the UK because of the spread of the Omicron variant has led to a fall in attendance of city-centre gyms in the past week.
In response to the success of at-home fitness companies during lockdowns, PureGym plans to launch a Peloton-style connected bike next year. Cobbold told the FT last month that “an emerging Champions League of gyms”, including PureGym, had an opportunity to innovate and expand.
Gapping down
In reaction to earnings/guidance:
- PL -15.3%
Other news:
- ADGI -69.8% (reports reduction in in Vitro neutralizing activity of ADG20 against omicron SARS-CoV-2 variant)
- CABA -36.1% (reports top-line biologic activity data from two lowest dose cohorts in DesCAARTes trial in patients with mucosal pemphigus vulgaris)
- APTO -28.2% (HM43239 demonstrates durable clinical benefit)
- MESO -14.9% (provides update on Novartis (NVS) agreement)
- PRPL -7.9% (CEO stepping down names new CEO; expects rev adj. EBITDA at low end of previous guidance)
- TSVT -6.6% (Presents Data Across Multiple Cell Therapy Programs at ASH 2021 Annual Meeting)
- GBIO -3.5% (provides update on preclinical studies for hemophilia A program)
- MX -2% (MX and Wise Road Capital mutually terminate acquisition agreement)
- CDTX -1.2% (announce positive topline results from the global phase 3 pivotal ReSTORE trial of Rezafungin for the treatment of candidemia and invasive candidiasis)
- BLU -1.1% (commences $175 mln stock offering) .
Analyst comments:
- DOCS -5.4% (downgraded to Underweight from Neutral at JP Morgan)
- DDOG -4.3% (downgraded to Neutral from Overweight at JP Morgan)
- RL -4.3% (downgraded to Sell from Buy at Goldman)
- ZS -4.2% (downgraded to Underweight from Neutral at JP Morgan)
- BIG -3.1% (downgraded to Sell from Neutral at Goldman)
- AKAM -2.7% (downgraded to Underweight from Neutral at JP Morgan)
- CDNS -2% (downgraded to Neutral from Overweight at JP Morgan)
- ADBE -1.9% (downgraded to Neutral from Overweight at JP Morgan)
- SPNS -1.3% (downgraded to Underweight from Neutral at JP Morgan)
- DOX -1% (downgraded to Neutral from Overweight at JP Morgan)
Gapping up
News:
- MOLN +11.3% (to collaborate with Novartis (NVS) to develop DARPin-conjugated radioligand therapeutic candidates for oncology)
- IMTX +9.9% (Immatics N.V. and Bristol Myers Squibb (BMY) enter into global exclusive license for Immatics' TCR Bispecific Program IMA401)
- ATRA +9.3% (Results from Pivotal Phase 3 Trial (ALLELE) of Tab-cel at the 63rd American Society of Hematology (ASH) Annual Meeting)
- SNSE +6.9% (to be added to the NASDAQ Biotech Index)
- NEOG +6% (to combine 3M's (MMM) Food Safety business with its existing operations)
- AA +4.2% (to join S&P MidCap 400; also announces closure of aluminum smelting capacity at Wenatchee)
- LAZR +3.7% (announced its authorization and intent to purchase $250 mln or more of its Class A common stock which is anticipated to commence today after market open)
- EQT +3.6% (approves $1 bln share repurchase program also to reinstate its dividend)
- NGD +3.5% (to sell Blackwater Project gold stream for upfront cash consideration US$300 mln)
- FATE +3.1% (showcases positive interim phase 1 Data for FT596)
- AFG +3.1% (declares special cash dividend of $2.00/sh)
- TGTX +2.5% (FDA has accepted the Biologics License Application for ublituximab)
- ALSN +1.7% (selected by Israeli Ministry of Defense for infantry fighting vehicle)
- KMPH +1.7% (to be added to the NASDAQ Biotech Index)
- ELY +1.7% (approves $50 mln share repurchase program)
- SV +1.5% (NuScale Power announces plans to go public via merger with Spring Valley Acquisition Corp)
- PGEN +1.4% (positive interim phase 1 data for PRGN-3006 UltraCAR-T)
- LDOS +1.3% (awarded contract by U.S. Air Force worth an estimated $82 mln)
- TALS +1.3% (presented a new analysis of HLA mismatching between donors and recipients participating in the Company's Phase 2 trial in living donor kidney transplant)
- GIIX +1.2% (FOOTPRINT to be publicly listed on NASDAQ through combination with Gores Holdings VIII)
Analyst comments:
- BYND +4.3% (upgraded to Neutral from Underweight at Piper Sandler)
- MODN +2.3% (upgraded to Overweight from Neutral at JP Morgan)
- CPRI +1.6% (upgraded to Buy from Neutral at Goldman)
- NOV +1.5% (upgraded to Overweight from Neutral at JP Morgan)
- CRWD +1.4% (upgraded to Overweight from Neutral at JP Morgan)
- AVLR +0.9% (upgraded to Overweight from Neutral at JP Morgan)
- AAPL +0.8% (upgraded to Buy from Neutral at BofA Securities)
Pfizer Says Its Covid-19 Pill Likely Works Against Omicron
Antiviral drug Paxlovid stayed 89% effective at reducing the risk of hospitalization and death in a final analysis of a key study in high-risk adults
Preliminary laboratory tests gave encouraging signs that Pfizer Inc.’s PFE 4.59% experimental Covid-19 pill for the newly infected could work against Omicron, the company said.
Pfizer also said Tuesday that a final analysis of late-stage study results confirmed the drug, named Paxlovid, was 89% effective at reducing the risk of hospitalization and death in adults at high risk of severe Covid-19.
The positive results come as the Food and Drug Administration reviews whether to clear use of Paxlovid in high-risk adults, a decision that could come before the end of the year.
“This was a real home run, gives tremendous hope for another highly effective intervention,” Pfizer Chief Scientific Officer Mikael Dolsten said in an interview.
Meanwhile, a separate, preliminary analysis provided signs the drug may help people at low risk of severe Covid-19, such as vaccinated individuals who end up becoming sick.
Paxlovid in the early study analysis reduced the risk of hospitalization and death by 70% in adults at low risk of severe Covid-19, though it failed to reduce or resolve their symptoms within four days.
Study subjects who were at high risk of developing severe disease had to have at least one characteristic or underlying health condition such as being obese or elderly. The other study included people who were either unvaccinated and at low risk of developing severe disease, such as young and healthy individuals, or vaccinated people with at least one risk factor for developing severe disease.
Both studies testing Paxlovid in people showed that the amount of virus, or viral load, in subjects who received the drug was significantly less than in the placebo groups, Pfizer said.
A lower viral load could mean less transmission of the virus.
Doctors and health experts have been looking for an antiviral like Paxlovid, which people could easily take at home within several days of symptoms emerging to prevent their cases from turning serious and requiring hospitalization.
The emergence of Omicron has shadowed the approach of such antivirals, however, because of uncertainty whether the new strain could elude treatments and vaccines.
To make an assessment, drugmakers have been studying whether authorized and experimental Covid-19 drugs and vaccines are effective against Omicron.
Researchers suspected Pfizer’s pill would hold up well because it stops the virus by blocking the activity of a key enzyme, known as protease, that the virus needs to replicate and isn’t believed to be mutated in Omicron.
That is different from Covid-19 vaccines and some treatments that target a different part of the virus, the spike protein, that is the site of many Omicron mutations.
The early Pfizer laboratory tests showed that Paxlovid blocked the protease enzyme in Omicron, as well as other variants of concern, Dr. Dolsten said.
“Without the protease functioning, the virus can’t replicate and cause disease,” Dr. Dolsten said. “I’m very convinced that the effects on Omicron by Paxlovid will be very substantial.”
Pfizer said it plans on performing more testing to measure Paxlovid’s effectiveness against the variant.
In November, Pfizer said an early look at a key study found Paxlovid was 89% effective at reducing the risk of hospitalization and death in high-risk adults.
The FDA has been waiting for the final results before making an authorization decision, Pfizer Chief Executive Albert Bourla said last week at The Wall Street Journal’s CEO Council.
In the final analysis, five of the 697 high-risk subjects who received the drug within three days of symptoms were hospitalized or died from Covid-19, compared with 44 out of 682 subjects who received a placebo, Pfizer said.
Nine study volunteers who received a placebo died, compared with none in the treatment arm, the company said.
Researchers also reported the drug was 88% effective if taken within five days of symptoms.
The final study analysis of another oral antiviral, from Merck & Co. and partner Ridgeback Biotherapeutics LP, showed a 30% risk reduction, lower than the 50% found during an early look.
Separately, Pfizer has been testing Paxlovid’s effectiveness in people at low risk of developing severe disease, including some who were vaccinated.
The company’s preliminary look at the results found Paxlovid failed to resolve or consistently reduce self-reported symptoms within four days, which was the study’s main goal and a way of determining whether an antiviral is effective.
Two of the 333 low-risk subjects who got Paxlovid were hospitalized, however, compared with eight of 329 subjects who received a placebo, resulting in the 70% efficacy, Pfizer said.
No subjects had died from Covid-19 in the analysis, which looked at how about 45% of the total number of subjects targeted for the study fared.
Dr. Dolsten said Pfizer planned to discuss with health authorities in the U.S. and other countries about potentially making the drug available to low-risk people, and whether Pfizer should do more testing.
Early premarket gappers
- Gapping up:
- GAMB +8.4%, MOLN +8.1%, ATRA +7.3%, SNSE +6.9%, AA +4.1%, FATE +3.1%, AFG +3.1%, FTNT +2.5%, WPM +2.2%, ELY +1.9%, ALSN +1.7%, PGEN +1.4%, NGD +1.4%, LDOS +1.3%, NOG +0.8%, BMY +0.7%
- Gapping down:
- APTO -16.4%, PL -11.6%, PRPL -8.2%, MESO -8%, TSVT -6.3%, BLU -3%, FFIE -1.8%, MX -1.5%