Town Sports International Holdings Inc., one of the largest owners and operators of fitness clubs in the Northeast, agreed to acquire the studio business of Flywheel Sports Inc., the spin chain.

The acquisition is expected to close in the first quarter of 2020, upon satisfaction of customary closing conditions. Established in 2010, Flywheel has 29 indoor cycling locations across the United States and multiple modalities and content, including its results-driven indoor cycling and off-bike precision training workouts, including “FlyBarre” and “FlyFIT”.

In June 2018, reports arrived that Flywheel had been taken over by a lender amid financial struggles and was working with an advisor to explore a possible sale. In August, Flywheel Sports announced it was closing 11 of its 42 locations, including all its studios in Los Angeles.

“Flywheel is an iconic name in the fitness industry and this acquisition accelerates TSI’s strategic plan as we continue to upgrade our club network and offer more value to our members. The Flywheel acquisition fits perfectly into TSI’s strategy, as it enables us to elevate our members’ fitness experience by offering a luxury, boutique product while elevating their fitness routines, along with the benefits of additional formats and locations. We look forward to integrating and adopting Flywheel’s five star standards and operational excellence within TSI as we raise the operational and service standards at all TSI locations,” said Patrick Walsh, TSI’s Chairman and CEO.

Walsh continued, “Through this acquisition, TSI plans to enhance the gym experience, similar to the industry’s aggregators, and offer more variety in content, locations and experience for a lower cost.”

“Much has been written about the changes the fitness industry is currently undergoing,” said Darren Richman, co-founder of Kennedy Lewis Investment Management, Flywheel’s current owner. “As in the case of providers like Netflix who reimagined the importance of content, and the need to provide customers with more for less, we think that Patrick is following the exact same path at TSI in the fitness space. He is facilitating the delivery of more fitness modalities and content for value-conscious consumers.”

TSI is expected to benefit from enhanced revenue potential as the company provides its over 600,000 members access to Flywheel’s boutique facilities through packaged membership options. Flywheel’s more than 300,000 members will also benefit from similar membership packages as more than half of Flywheel locations are within two miles of a TSI location.

As part of the acquisition, Kennedy Lewis agreed to provide seller financing of $25 million in the form of a second lien loan. Kennedy Lewis has also agreed to assist with the refinancing of TSI’s existing term loan, with a follow-on commitment of up to $25 million of additional second lien debt. The closing and follow on commitment is conditioned upon TSI’s ability to reach acceptable terms with its existing term loan lenders. Until the acquisition closes, TSI and Flywheel have agreed to cross-market each other’s products.

Town Sports International Holdings is an operator of fitness centers in the Eastern United States, California and in Switzerland. Its brands include New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs, Lucille Roberts, TMPL Gym and Total Woman Gym and Spa.

Established in 2010 in New York’s Flatiron District, Flywheel offers a high-intensity indoor cycling experience using proprietary technology in metric-based training that removes the guesswork for riders to set personal goals and track progress over time, in-studio and at home. A private, equity-backed company, Flywheel employs more than 800.

Photo courtesy Flywheel