Cari Gundee rides her peloton exercise bike at her home in San Anselmo, California on April 6, 2020.
Ezra Shaw | Getty Images
Peloton announced Monday that it plans to acquire exercise equipment maker Precor for $ 420 million to expedite production of its bikes and treadmills and meet promised delivery windows.
Demand for Peloton’s exercise equipment has increased during the coronavirus pandemic and puts a strain on the supply chain as consumers want to exercise at home during the pandemic.
Under the agreement, Peloton will acquire Precor’s Whitsett, North Carolina, and Woodinville, Washington, factories, which together have more than 625,000 square feet of manufacturing space. The deal also strengthens Peloton’s product development efforts by adding nearly 100 research and development employees to the existing workforce.
The transaction is expected to close in early 2021. Upon completion of the transaction, Precor will operate as a business unit within Peloton, the company said.
Precor’s current President, Rob Barker, will become Precor’s CEO and General Manager of Peloton Commercial, reporting to Peloton President William Lynch.
“By combining our talented and dedicated R&D and supply chain teams with the incredibly capable Precor team and decades of experience, we believe we are entering the global networked fitness market in terms of both innovation and Scalability can lead, “Lynch said in a statement.
When Peloton reported quarterly results in November, it warned that it would operate under supply restrictions “for the foreseeable future” due to increased demand for its products. Due to the surge in sales, Peloton customers have reported late deliveries and poor service.
Peloton anticipates that through Precor’s relationships with US hotel chains, apartment buildings, and college and corporate sites around the world, Precor will help launch the combined company into new markets.
As of Monday’s close of trading, Peloton shares are up more than 403% this year, increasing their market cap to $ 42.2 billion.
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