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Lexington-based Urban Active fitness chain to be sold

LA Fitness is in talks to acquire Lexington-based Urban Active. Shown here in January 2009, Kevin Goodin, left, and others watch the inauguration of Barack Obama while exercising on treadmills at a Lexington Urban Active. Photo by Matt Goins
LA Fitness is in talks to acquire Lexington-based Urban Active. Shown here in January 2009, Kevin Goodin, left, and others watch the inauguration of Barack Obama while exercising on treadmills at a Lexington Urban Active. Photo by Matt Goins

Lexington-based fitness chain Urban Active is in talks to be sold to national health club company LA Fitness.

LA Fitness issued a statement Monday that said it plans to acquire all Urban Active clubs, although the deal is subject to closing conditions.

"While the parties are hopeful that the transaction will be completed within the next several weeks, there can be no assurance as to when or whether a closing will occur," according to the statement.

Financial terms were not disclosed.

An Urban Active spokeswoman declined to comment on the pending deal.

Club Industry ranks LA Fitness as the second-largest U.S. health club chain, with an estimated $1.2 billion in revenue in 2011. The company, based in Irvine, Calif., has more than 500 locations in 22 states, according to its Web site. It has one Kentucky location, in Northern Kentucky's Crescent Springs.

By contrast, Urban Active ranked ninth with an estimated $107.5 million in revenue in 2011, according to the publication. The company has 36 locations across Kentucky, Georgia, Nebraska, North Carolina, Ohio, Pennsylvania and Tennessee, according to its Web site.

Urban Active was formed in 2007 when Lexington businessman Royce Pulliam pulled his 25 fitness centers of the Gold's Gym chain. He rebranded the clubs that were in Kentucky, Tennessee and Ohio as Urban Active Fitness, reflecting his admiration for Sir Richard Branson's Virgin Active Health Clubs in Great Britain.

If the deal occurs, it would be the latest in a series of acquisitions by LA Fitness, said Stuart Goldman, managing editor of Club Industry.

The company purchased 171 Bally Total Fitness Clubs last year and 32 Lifestyle Family Fitness clubs in Florida earlier this year, Goldman said. He added that Club Industry reported that LA Fitness tried to buy Urban Active last year, but the deal fell through.

"The transition with Bally didn't go as smoothly as expected initially, but that was LA's first big acquisition," he said. "Going through what they did, I know they learned some lessons about how to handle the acquisition of memberships."

In a news release announcing its acquisition of the Lifestyle Family Fitness clubs, LA Fitness noted it would be honoring all of locations' active memberships at their current rates.

Customer service issues for LA Fitness appear to be less pronounced than with Urban Active, which has come under strong criticism in recent years because of billing issues.

LA Fitness received a rating of "A+" by the Better Business Bureau, according to the BBB's Web site. Urban Active, meanwhile, received a rating of "C," up from an "F" the company received in 2011.

Urban Active recently agreed to settle a lawsuit over billing practices in Northern Kentucky. That case was filed in 2009 after the plaintiffs canceled their memberships but money continued to be withdrawn from their bank accounts.

Attorneys in the case said the fitness chain made canceling memberships difficult for numerous consumers.

Among those locally with problems was Mark Cain, who contacted Urban Active in 2009 to stop monthly deductions from the checking account of his son, Shelby, who committed suicide at the age of 23.

Mark Cain said several months of phone calls and visits proved fruitless, and the deductions finally ended only after the manager of his son's Chase bank branch stopped the account from being debited.

After nine months, he said, he received two checks crediting his son's estate with the fees.

"We were shocked and surprised that something that should be so easy took so long," he said. "I've never experienced anything like it in my entire life."

Urban Active also has been criticized for its equipment.

Lexington's Charlie Dugan, who has been a member of the Palumbo Drive location since 2006, greeted the potential acquisition with enthusiasm.

"It has to be good news for the members," he said. "It can't possibly get any worse."

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