Cannons is in exclusive negotiations to buy its quoted rival Holmes Place for 220p a share valuing the company at £350 million ($549 million).

Meanwhile in a separate development private equity firm Duke Street Capital is in talks to buy Invicta Leisure for £140 million ($220 million).

This will enable Duke Street to merge Invicta with Esporta, the health club chain Duke Street bought a few weeks ago for £145 million ($228 million). The combined business will have 18 raquet clubs and 42 health and fitness clubs.

Holmes Place, which owns 66 clubs, including 49 clubs in the UK, and Cannons, which operates about 45 clubs, will maintain their separate brands. The merger is likely to see some of the UK health clubs close but will enable Holmes Place to accelerate its expansion in continental Europe where the market is less saturated in the UK.

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