Parkwood Holdings is to acquire leisure management company, CCL Leisure (CCL), from Clear Channel Entertainment UK (CCE) in a £100,000 cash deal.

Parkwood will also pay CCE an amount equal to the current assets and liabilities of CCL as of 30 April 2004 – to a maximum of £500,000.

A statement from Parkwood said the ‘comparatively small consideration’ it has agreed to pay reflects the decline in the number of contracts operated by CCL and the fact that some which will remain are currently making a loss.

CCL currently manages 33 leisure facilities in England on behalf of local councils, although by the time of the acquisition, this will have fallen to 26.

A further 13 of its contracts will expire by the end of 2006 and the remainder between 2007 and 2028.

Parkwood’s acquisition announcement said: “A number of the CCL contracts are loss making. It is Parkwood’s intention to pursue extensions on those contracts where an appropriate level of return can be made in the future.

“The CCL Group does however have a number of operating contracts which are expected to provide attractive returns for several years. This, when coupled with the fact that the incremental costs of operating the business within the Parkwood Group are expected to be lower than those currently incurred by the CCL Group, is expected to result in an improvement to its profitability.”

In the year to 31 December 2003, CCL reported a gross profit of £505,000 but a pre-tax loss of £892,000 on turnover of £23.7m.

If the takeover goes ahead, the combined group will operate 60 leisure centres with an annual turnover of £35m.

Parkwood managing director, Andrew Holt, said: “This development has come at a time when growth in the best value public sector market has been difficult to achieve, largely because of a trend towards in-house leisure trusts.

“CCL has a number of very profitable long term contracts. The merger of these two successful businesses can only be a good thing for our respective clients and employees,” he said.

Holt himself previously worked for CCL as an operations director a decade ago.

The CCL deal will be put to a shareholder vote at a Parkwood EGM at the beginning of May.

Parkwood Holdings, which operates within three main sectors – park and open space management, leisure management and healthcare – has recently signed its third PFI leisure contract at Penrith in Cornwall and is expected to finalise a further PFI deal in Breckland this summer. Details: www.parkwood-holdings.co.uk

Picture shows Parkwood managing director, Andrew Holt