Fund 1 Investments has delivered a non binding proposal to the board of Xponential Fitness to acquire all outstanding Class A shares in a take private transaction at $5.61 to $7.00 a share in cash, according to Amendment No. 4 to its Schedule 13D filed on October 30. The range is at least 50 percent above the October 29 closing price of $3.74, and the shares rose sharply on the disclosure, closing the week at $4.46 after trading as high as $4.68 on Friday.
Fund 1, a subsidiary of Pleasant Lake Partners, holds 4,170,610 shares, 9.9 percent of the class, bought for about $25.85 million in aggregate. A September agreement caps its ownership at 19.9 percent. The filing says Fund 1 is open to other shareholders participating alongside it while it takes a majority interest, and that it would seek a waiver of the company’s stockholder rights agreement, adopted on October 12, to work with other holders.
Xponential, the Irvine based franchisor behind Club Pilates, Pure Barre, StretchLab and YogaSix, has been under pressure: second quarter revenue fell 13 percent to about $66 million, guidance was cut, and the company hired a new chief financial officer in October. It appointed Jefferies in April to evaluate strategic alternatives including a merger or sale.
No formal offer has been made and the board has not responded in the filings read. The proposal’s value is as a priced marker: a holder with a tenth of the company has now put a cash range, and a premium, on the record.