Viva Leisure expands local network with strategic World Gym Australia investment

Fitness group Viva Leisure (ASX: VVA) has acquired a 25% stake in World Gym Australia and made a strategic investment in three of its Queensland franchises.

The $16.7 million deal will see the company take over World Gym outlets in Stafford, Coomera and Underwood, giving it access to a big-box gym format and providing a statewide scalable platform for growth.

The transaction, forecast to be finalised by February 2025, is expected to create the “largest and most diversified” fitness network and community in Australia.

Acquisition terms

Viva will fully fund the acquisition through existing cash reserves, banking facilities and up to $1m of Viva scrip.

The deal includes a call option to acquire the remaining 75% of World Gym Australia within 36 months and a 50:50 joint venture option with World Gym’s founders to develop additional corporate locations.

Viva will add 169,000 World Gym members to its network via the transaction, taking its total numbers to over 587,000 across more than 450 locations.

The company expects World Gym Australia’s annual retail sales of more than $26m, including merchandise and supplements, to further enhance its retail options.

Technology integration

Viva’s investment includes provisions to integrate its innovative technology across World Gym Australia’s network to drive operational efficiencies and create new revenue streams.

This will include The Hub member management platform, the VivaPay payment processing system – which is expected to handle over $140m in annual transactions across the three franchises – and the in-development product Viva Pass.

These integrations align with Viva’s commitment to delivering a seamless and technology-enabled fitness experience.

Growth trajectory

Viva chief executive officer Harry Konstantinou said the acquisition would deliver substantial financial and strategic benefits and further drive Viva’s growth trajectory.

“World Gym will strengthen our diverse offering while introducing a new market for VivaPay and other technologies,” he said.

“We have previously shown our ability to assist gym franchisees with solutions to help make their businesses and the network more profitable [and] we are confident we will be able to replicate this success with World Gym.”

Plus Fitness acquisition

The World Gym Australia acquisition is the second-largest of its kind in Viva’s history, behind the $18m buyout of Plus Fitness health clubs in August 2020.

That deal saw the company inherit 197 franchised locations across Australia, New Zealand and India with approximately 175,000 combined members and revenues in excess of $100m.

Under the terms, Viva agreed to establish a New Zealand presence to manage existing franchisee relationships and grow the franchisee network under the Plus Fitness and other Viva Leisure brands.

Boutique Fitness investment

Viva recently made a $2m strategic investment into Boutique Fitness Studios in return for a 34% equity stake.

The investment included an option to acquire Boutique’s entire business within the next two years for $5.8m and provide integrated services to enhance member experience and operational efficiency.

Boutique Fitness Studios holds the Rumble Boxing, Club Pilates, StretchLab and CycleBar brands under licence from Xponential Fitness, the world’s largest franchise group of boutique health and wellness brands.