EXCLUSIVE: Retail giant in talks with Saudi's Al Hokair to buy Leisure Unlimited.
Al Hokair Group, the Saudi leisure conglomerate, is understood to be in talks to sell its subsidiary Leisure Unlimited, holder of the Middle East franchise for Fitness First, to the Landmark Group.
UAE-based Landmark has begun due diligence on the deal, which would see the retail giant add the Fitness First gym brand to its franchise portfolio.
A source close to the deal said Dubai-based Leisure Unlimited had been starved of funding in recent months, putting pressure on its growing gym business.
Buyout talks with at least two previous firms had fallen through.
Leisure Unlimited operates more than 13 branches of Fitness First across the Middle East, including 11 in the UAE. The gym chain is owned by private equity group BC Partners, and has 550 clubs worldwide with more than 1.4m members in 20 countries.
BC is eyeing a stock market flotation in Asia for the health firm, which is likely to value the business at around $1.80bn.
The Landmark deal follows a legal spat between the UK-based Fitness First and Leisure Unlimited, which in May saw the gym chain take out an advertisement in a UAE newspaper for a new franchisee.
Leisure Unlimited is understood to have sought legal advice after the move, but the dispute has now been resolved to allow the unit to be sold with its franchise relationship intact, the source said.
Landmark Group is one of the largest retail conglomerates in the region, with more than 900 stores and some 31,000 employees.
A spokesperson for the Landmark Group said: "The Landmark Group has diversified from its core retail businesses into various leisure and hospitality sector businesses over time and the fitness industry would be of interest to the group. We offer no comments on the market speculation of any purported transaction in this space.”
Fitness First and Leisure Unlimited declined to comment on the deal.