Following the completion of PureGym’s Blink Fitness acquisition, outgoing CEO, Humphrey Cobbold, and incoming CEO, Clive Chesser, lift the lid on the rollercoaster journey.

“I had this vision of a steady, straightforward handover with Clive and grand ideas about getting some professional help in to make sure we get it exactly right and then this thing blew up in the US and the well laid plans went in the bin and Clive started work about two weeks before we actually started paying him,” Cobbold tells HCM.

The UK-based low cost operator first set its sights on the US market in 2018, when it looked at a number of operators. As the closest brand to PureGym, Blink was of interest but at the time was very much part of the Equinox portfolio, which had plans to expand it to the midwest and across the USA.

Plans were shelved during the pandemic and the next time Blink came onto the PureGym radar was in 2022, when Cobbold received a call from an investment bank saying Equinox was looking to sell Blink Fitness. “It wasn’t ideal timing as we were in recovery mode from the pandemic. But you have to look at businesses when they come up for sale, not when you want them to,” says Cobbold.

However, the price tag was high – US$250-US$300 million – and after some due diligence, the PureGym team again decided the time wasn’t right, with the Ukraine war and rising financing rates.

Third time lucky

The call came again in July this year, that Equinox was being forced to put Blink into Chapter 11 bankruptcy proceedings. This time PureGym was ready and by 9 September had secured stalking horse bidder status in the deal.

“This meant we had to put a cast iron promise, to buy the business for a certain sum – US$105 million – on the table knowing that we wouldn't get to own the business before the end of November and of course there's lots that can happen in three months,” says Cobbold.

“The beauty of the Chapter 11 process is you can keep all the good bits and reject the bad bits. So we chose to leave out Illinois, California and Texas, because we're not ready to be operating across a huge country like the US.

“You also get to renegotiate with all the landlords and reset rents and conditions, which is important as the New York sites have changed a lot since the pandemic.

“But there's a lot of hassle that goes on with Chapter 11 as well. We had to be in bankruptcy court three times in order to win and it's a rollercoaster ride as you're going through.”

Cobbold was on holiday when the actual Chapter 11 auction took place at the end of October, so Chesser was called on. “I was invited out to this auction, in New York, and it was suggested it would take about three hours. It lasted three days!” he says.

“We were pronounced the winners and flew home triumphantly to then find out there had been an appeal from the unsecured creditors and the other bidder. [Planet Fitness and their local franchise partner, Supreme Fitness] So consequently, we ended up in court again a week later arguing why our bid was better, even though it was lower.”

Having already arranged the funding, the PureGym team was well placed to drive the US$121 million deal through. Many stakeholders were on side because PureGym wanted to keep the head office, whereas Planet Fitness would have closed it.

“I saw the counter bidder at the other end of the table was working very hard to put together bids that might give him a chance, but I sat there with absolute confidence that we were going to win this because the bid was so well put together,” says Chesser.

The next stage will be integrating the 67 new sites – which are mainly based around New York, New Jersey and Pennsylvania – into the business. A rebrand will take place in Q2 or Q3 of 2025.

“This gives us a much better platform to approach franchising elsewhere in the US,” says Cobbold. “It’s a huge place so we can't roll out across the whole country, but if we get franchising right, then I think we can make some real inroads into the market.”

Changing of the guard

For Cobbold, being appointed CEO of PureGym in 2015 was the silver lining which came out of being “unceremoniously fired” from Wiggle. As he prepares to hand over the reins to Chesser and take up the role of chair, he reflects on the last 10 years as being “a tremendous journey.”

He has led the company from having 85 sites in one country to expanding into six countries with some 700 sites and more than two million members.

“We came through the existential threat of the pandemic and the rollercoaster of the Peloton era when we were told we wouldn’t be needed in the future,” he says. “If I could have written that script back in 2015 it would have sounded ridiculous!”

“It's been the standout period of my working life, to work with colleagues across PureGym, but also interact with everybody else in the industry. The collaboration that goes on in this industry is somehow managed alongside pretty intense competition. I think the industry still has huge potential to continue to grow and develop.

“It's been a lot of fun and also had its moments. We all felt we were staring down the barrel at times, for example during the pandemic. I've tried to IPO the company three times and failed three times. I don't regret that at all, I think being a private company suits me personally better, and I think it suits our business better.

“For example, there's no way we could have pulled this deal off as a public company. It would have been too complicated to explain to everybody what and why. In our case, it was a five minute discussion with our shareholders to say, this has come up, we think it's a good idea for the following reasons. They said, “we agree, get on with it.” ”

Cobbold leaves big shoes to fill, but Chesser has hit the ground running. “The sector is brilliant and an important part of my life, as I run marathons and cycle,” he says. “It's a very purpose-driven business, especially with PureGym and the way it’s changed the whole paradigm of accessible fitness in this country. From a business point of view, coming from pubs, I'm enjoying being in a sector with some tailwinds!”

Most recently CEO of Punch Pubs & Co, Chesser previously had an international role with Haagen Dazs managing the franchise side of the business. “Now my children are at university age, it's a great time of life and career to get back into a really exciting international project,” he says.

‘I'm taking on an incredible business that this guy has built up. He's very humble about it, but it's extraordinary what he's achieved here and I'll try to keep moving forward.”