Basic Fit (OTCPK:BSFF.F) M&A Announcement Transcript

Summary of BasicFit and CleverFit Transaction Conference Call Company and Industry - Company: BasicFit - Acquisition Target: CleverFit, Europe's largest fitness franchise - Industry: Fitness and Franchising Core Points and Arguments 1. Acquisition Announcement: BasicFit announced the acquisition of CleverFit, enhancing its position as the market leader in Germany and expanding its footprint in Europe [2][4][6] 2. Strategic Fit: The acquisition is seen as transformational, allowing BasicFit to create a dual growth engine by combining franchise management with its existing club model [5][6] 3. Geographic Expansion: The acquisition adds six countries to BasicFit's operations, increasing its total club count to over 2,150 and membership to more than 5.7 million [8][6] 4. Financial Metrics: CleverFit had a revenue of approximately €50 million and an underlying EBITDA of €14.5 million in 2024, with BasicFit paying a low implied multiple for the acquisition [8][9] 5. Franchise Model: CleverFit has 454 franchise clubs and a waiting list of over 150 potential franchisees, indicating strong demand for expansion [9][86] 6. Growth Strategy: BasicFit plans to limit its owned club growth to focus on leveraging the new franchising platform, with a total of 125 clubs expected to open in 2025 [13][14] 7. Financing Details: The acquisition is financed through committed loans totaling €160 million, with an additional potential earn-out of €50 million over three years [11][12] 8. Market Leadership: The acquisition positions BasicFit as the true pan-European fitness leader, particularly in Germany, Austria, and Switzerland [6][8] Additional Important Content 1. Synergies and Integration: The management emphasized the potential synergies between BasicFit and CleverFit, particularly in technology and marketing, but detailed discussions will occur post-acquisition [21][29] 2. Franchisee Relations: CleverFit has a loyal franchisee base, and BasicFit plans to maintain strong relationships with them while exploring potential changes to franchise agreements [88][93] 3. COVID-19 Impact: The pandemic affected CleverFit's growth, but recovery is underway, with new clubs expected to open soon [90][92] 4. Brand Strategy: Future discussions will determine whether to maintain separate brands or consolidate under BasicFit, with a focus on enhancing brand recognition through marketing [29][79] 5. Performance Variability: The performance of CleverFit clubs varies significantly based on location, with potential for growth in member numbers through improved marketing strategies [74][78] 6. Long-term Goals: BasicFit aims for a leverage ratio below 2x debt to EBITDA, with a focus on optimizing the partnership with CleverFit [51][68] This summary captures the key points discussed during the conference call, highlighting the strategic importance of the acquisition and the anticipated benefits for BasicFit in the fitness industry.