Irvine-based Xponential Fitness, a significant franchisor in the fitness industry, is currently the focus of a potential acquisition effort by one of its major shareholders. Fund 1 Investments, which holds a substantial stake in the company, is reportedly exploring options to take Xponential Fitness private. This development was first highlighted by Bloomberg, with details subsequently reported by the Orange County Business Journal.
Fund 1 Investments has been an active participant in Xponential Fitness's shareholder landscape. The firm, a subsidiary of Pleasant Lake Partners LLC, an equity firm based in Puerto Rico, became Xponential's third-largest shareholder through a notable investment in August. During that month, Fund 1 acquired 4.17 million shares of Xponential Fitness. This transaction amounted to approximately $25.9 million, solidifying Fund 1’s position with a 9.9% stake in the Irvine-based franchisor.
The engagement between Fund 1 and Xponential Fitness continued into September. At that time, the two parties reached an agreement that placed a specific limit on Fund 1’s total ownership. This agreement capped Fund 1's potential stake at 19.9%. This established a clear framework for Fund 1’s involvement, setting expectations for its influence and ownership ceiling within the company.
According to insights from people familiar with the matter, Fund 1 Investments is now evaluating a bid to acquire all outstanding shares of Xponential Fitness. The firm is considering an all-cash offer for the fitness studio franchisor. The proposed acquisition price range being discussed is between $5.61 and $7.00 per share.
This potential takeover bid has already registered an immediate impact on Xponential Fitness's stock performance. Following the Bloomberg report on Friday, shares of Xponential Fitness, traded on the NYSE under the ticker XPOF, saw a considerable increase in value. During midday trading, the stock price surged by nearly 20%. The market reaction brought the stock price to approximately $4.44 per share at that point in trading, placing the company’s total market capitalization at $221 million.
The consideration of a bid, and the proposed price range, mark a significant moment for the Irvine-headquartered company. While discussions are reportedly underway, it is important to note that no formal offer has yet been announced by Fund 1 Investments. The process remains in an exploratory phase as Fund 1 evaluates the possibility of taking the fitness franchisor private.
Should Fund 1 proceed with a formal bid and successfully acquire Xponential Fitness, it would represent a notable shift in ownership and operational structure for the Irvine firm. The move from a publicly traded entity to a private one would change how the company operates and how its financial information is disclosed, impacting stakeholders from shareholders to employees and the broader Irvine business community.
