Whitbread has confirmed it has agreed to sell the David Lloyd leisure chain to London & Regional Holdings and Bank of Scotland for £925 million ($1.83 billion) in cash.
London & Regional, a private property company, and Bank of Scotland bought David Lloyd through an investment vehicle called Versailles Bidco.
The deal will be completed in early August, Whitbread said, adding the proceeds from the sale will initially be used to pay down debt.
"Subsequently, in the absence of any further value-creating opportunities and based on current investment plans, Whitbread will move to the level of leverage outlined in its preliminary results announcement on April 24. This will be achieved through returning any excess cash to Whitbread's shareholders net of any further payments made into the company's pension fund," it said.
Alan Parker, Whitbread chief executive, said the disposal of David Lloyd will allow the group to proceed with its "ambitious growth plans" for its hotel, restaurant and coffee shop business.