The potential takeover of Fitness First UK by Dave Whelan’s DW Sports would mark the start of a mid-market fightback against the rise of the budget clubs, according to a well-placed source.

The two companies are in talks over a £70m+ buyout to create a 140-strong gym chain to rival the might of Pure Gym, which has become the UK’s largest private operator with more than 150 clubs. Companies such as Pure Gym and The Gym Group have driven health and fitness sector growth in recent years, as once mighty mid-market brands such as LA fitness and Fitness First have struggled to compete.

With DW Sports boasting a strong selection of northern locations and Fitness First having a significant presence in affluent areas of the south – particularly London – a successful merger would see the UK’s second largest health club chain boast an enviable spread of sites. It is understood that these geographical differences between DW and Fitness First would also reduce the likelihood of intense scrutiny from the Competition and Markets Authority (CMA), which previously proved the downfall of a proposed merger between Pure Gym and The Gym Group.

Health Club Management understands that former LA fitness MD Martin Long is advising DW Sports on the deal. Long is familiar with the process, having recently helped integrate LA fitness into the Pure Gym portfolio after its £70m sale in May 2015.

The deal is hoped to be completed by the end of July, with plans to add almost 60 Fitness First clubs to DW Sports’ estate of around 80 sites. There are currently 65 Fitness First clubs, and those not embedded within the enlarged company would mostly be sold to other mid-market operators in the fitness sector, as had been the plan under Fitness First’s ongoing optimisation strategy – which has seen the operator streamline significantly from its peak of 165 clubs in 2012.

Should a deal be reached, the enlarged group is expected to consider an IPO around 2018, although it is understood the company would be operated as a dual-brand entity, with Fitness First UK MD Martin Seibold set to be retained.

The sale of the UK business would mark the first step in the long-touted break up of Fitness First’s 370-strong global empire. Owner Oaktree Capital Management is likely to sell the remainder of the chain’s operations – in Asia, Australia and Germany – separately after the UK deal is completed.

Fitness First declined to comment.