World Gym Fitness Centers (Taiwan) said yesterday that it would officially take over the operation of California Fitness in Taiwan tomorrow and expected to go public in about three to five years’ time.
The fitness chain refused to reveal the acquisition price, but said its revenue could grow about 50 percent following the deal, while its market share would expand to 10 percent from the current 6 percent.
“The deal enables us to extend World Gym’s footprint across Taiwan,” company president John Caraccio told a media briefing in Taipei. “After the completion of the deal, World Gym will enjoy the economy of scale in terms of both locations and memberships, allowing us to operate more cost-effectively in Taiwan.”
World Gym will acquire all six California Fitness outlets and related facilities in Taiwan, expanding its number of outlets to 18 across the nation, with more than 90,000 members.
The deal was part of the US-based company’s plan to take over California Fitness’ overseas branches, Caraccio said.
He said the company had no plans to acquire other fitness clubs in Taiwan in the near future, adding that it intends to operate a total of 30 full-service fitness clubs in Taiwan by the end of 2012 before applying on the local bourse to be listed.
“World Gym will invest over NT$100 million [US$3.22 million] to renovate some of the older clubs,” Caraccio said.
He declined to tell how much the company plans on investing in the local fitness industry in the short-term. Following the acquisition, the entire staff of California Fitness in Taiwan will be able to stay in their current positions and the rights of its members will remain intact, the company said.
To further protect consumers’ rights, World Gym has set a special two-month renewal period for members who previously failed to renew their memberships — the so-called lifetime memberships — under a special promotional package offered by California Fitness.
“From Oct. 1 to Nov. 30, -affected members can resubscribe to the special privilege at their respective clubs,” Caraccio said.
Representatives of California Fitness in Taiwan told reporters yesterday that it would now focus on its businesses in Hong Kong and other places in the Greater China market.
The Consumers’ Foundation yesterday called for protection of consumer rights for the 30,000 people with memberships at California Fitness.
Consumer groups are closely watching the deal for any cases of rights infringement and to prevent history from repeating itself after Alexander Health Club Group (亞力山大健康集團) abruptly shut down in December 2007. The bankrupt fitness center initially left no answer for its 100,000 members who lost their membership, including those who paid high upfront fees not long before the bankruptcy.
Foundation chairman Hsieh Tien-jen (謝天仁) said that World Gym is obligated to provide at least the same level of fitness services to former members of California Fitness, who have paid their membership fees with expectations of a certain standard of fitness service. If consumers find that the quality of services is lower than that provided by California Fitness, consumers are entitled to full refunds.
Meanwhile, the Consumer -Protection Commission yesterday said it has met with other government agencies, including the Sports Affairs Council, which supervises fitness centers in the country, as well as local consumer ombudsmen to look into the matter.
The commission said that it will monitor the situation to ensure that World Gym delivers what it has promised California Fitness members, including that their membership status are unaffected by the merger and that the original six fitness center branches will stay in operation.
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