David Lloyd Leisure (DLL) has been taken over by private equity group TDR Capital. The new owners will inject investment to upgrade clubs and focus on domestic and international expansion.

It's believed TDR has identified 20 sites in the UK for expansion, as well as further opportunities abroad. There's also talk of potential mergers and acquisitions deals, as well as the prospect of £50m to upgrade existing facilities.

Though the terms of the deal haven't been disclosed, it's thought the business was sold by London & Regional and joint shareholder Caird Capital for around £750m. The takeover sees TDR gain control of a chain of 94 clubs, with membership figures standing at 440,000.

DLL CEO Scott Lloyd, said: “I'm delighted to be partnering with TDR for the next phase in DLL’s development. The team at TDR have an enviable track record of investing in successful businesses, particularly in leisure and DLL and its members will benefit from their experience and expertise.

“Looking forward we're confident we'll be able to deliver our future growth ambitions from the many and exciting opportunities which are now open to us.”

The sale comes six years after London & Regional joined up with HBOS to pay Whitbread £925m for the business in June 2007. It had already purchased Next Generation for £101.7m in May 2006. It then merged the two groups, creating a total investment value of £1.026bn. This means the TDR deal sees London and Regional taking a £276.7 hit at disposal.

DLL is keen to point out that this value difference reflects the mood of the market more than the state of the business. A spokesperson told Health Club Management magazine, "We're obviously in a different climate for financial deals from 2007, with different multiples applying. DLL was bought by London & Regional on a EBITDA multiple of over 13 - you'd never see that today unless you were a technology company.

"To move the business on to an investor interested in putting capital into it, they've got the price that they have."

David Lloyd says it has performed well over the last five years: EBITDA has improved from £77m in 2007 to £90m for the last full financial year, while the number of sites has increased from 78 in the UK and nine overseas - a total of 87 clubs in 2007 – to 81 clubs in the UK and 10 overseas with three new David Lloyd Studios, making a total of 94 sites today. Net debt has been reduced and now stands at £620m against £800m in 2007.

“We look forward to investing capital in order to further improve the member experience and to attract new members,” said TDR founder Manjit Dale.

“We believe that DLL will be a great first investment for our latest fund, drawing as it does on our experience of growing first-class leisure businesses in the UK for the benefit of members, staff and investors.”

In April this year, there were rumours that several investors were eyeing up the DLL business, with US-based KSL Capital Partners and Blackstone thought to be in the running.

Founded in 2002, TDR holds a number of interests in the leisure industry, with investments in Center Parcs, the Stonegate Pub Company and restaurant chain PizzaExpress.

Background briefing:
Tennis player David Lloyd founded the original DLL business in 1990 before selling out to Whitbread in June 2007. David Lloyd's son Scott launched his own chain – Next Generation - immediately following the Whitbread deal.
Capital & Regional acquired Next Generation in May 2006 and DLL in June 2007.

Scott Lloyd was appointed MD of the newly merged company in September 2007, with the announcement about the demise of the Next Generation name then made in July 2008 ahead of planned European expansion. At that point, all clubs were rebranded David Lloyd.