Sunday, April 14, 2024

Peloton makes its biggest acquisition ever

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Peloton Interactive has agreed to purchase fitness equipment company Precor for $ 420 million in order to acquire manufacturing capabilities in the United States and further expansion opportunities.

The New York-based manufacturer of expensive bikes and treadmills said the deal, the most significant to date, is expected to close early next year. Peloton will gain 625,000 square feet of manufacturing capacity in Whitsett, North Carolina and Woodinville, Wash. This is expected to help the company deliver its products faster to U.S. consumers, starting in late 2021. Peloton shares are up 2% in extended trading after the news.

Platoon sales soared this year as the pandemic has closed gyms and forced people to train at home. However, the company struggled to keep up with demand. This resulted in long wait times and frustrated customers. By bringing fitness equipment closer to American consumers, Peloton will be able to deliver products faster. Existing manufacturing facilities overseas will continue to operate, according to the company.

“We’ve seen a ton of growth. No one would want a global pandemic on anyone, but it has been a positive wind for our business, ”said Peloton President William Lynch. “Tracking this growth, which has been a moving goal, has been a priority for large companies.”

“As we invest in expanding our manufacturing, this is an area where Precor is very strong,” he added.

Precor supplies commercial grade stationary bikes, ellipticals, treadmills, climbers, and weight training equipment to gyms, hotels, apartments, college campuses and other corporate sites. Peloton’s business so far has focused on consumer sales, but the company plans to use Precor’s connections to expand into the commercial market.

The agreement will also bring nearly 100 Precor research and development engineers to Peloton. Precor will operate as a business unit of Peloton and Precor President Rob Barker will become CEO of that division. He will also be managing director of Peloton’s new business activity, reporting to Lynch, the company said.

The $ 420 million deal is a strategic start for Peloton, which has mostly avoided acquisitions – although Lynch has said the company may close more deals. Peloton shares have jumped about 400% this year, valuing the company at $ 42 billion.

Precor is a division of Finnish sporting goods company Amer Sports, which is owned by a group of investors including ANTA Sports, FountainVest Partners, Anamered Investments and Tencent.

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