Cari Gundee rides her Peloton stationary bike at her home April 6, 2020 in San Anselmo, California.
Ezra Shaw | Getty Images
Peloton said Monday it plans to acquire fitness equipment manufacturer Precor for $ 420 million, in an effort to accelerate production of its bikes and treadmills and meet promised delivery terms.
Demand for Peloton fitness equipment soared during the coronavirus pandemic, putting pressure on the supply chain as consumers try to exercise at home during the pandemic.
As part of the deal, Peloton will acquire Precor’s factories in Whitsett, North Carolina, and Woodinville, Washington, which together have more than 60,000 square feet of manufacturing space. The deal also bolsters Peloton’s product development efforts, adding nearly 100 research and development associates to its existing workforce.
Platoon shares were up more than 5% in out of hours trading.
The deal is expected to close in early 2021. Once completed, Precor will operate as a business unit within Peloton, the company said.
Current Precor president Rob Barker will become CEO of Precor and general manager of Peloton Commercial, reporting to Peloton president William Lynch, the company said.
“By combining our talented and dedicated R&D and Supply Chain teams with the incredibly capable Precor team and their decades of experience, we believe we will be able to lead the global connected fitness market on both innovation and scale” Lynch said in a statement.
When Platoon reported its quarterly results in November, it warned it would operate under supply constraints “for the foreseeable future” due to increased demand for its products. As sales soared, Peloton customers have reported delayed shipments and poor service.
Peloton expects that Precor will help introduce the combined company into new markets, thanks to Precor’s existing relationships with US hotel chains, multi-family homes, and college and corporate campuses worldwide.
As of Monday’s market close, Peloton’s shares are up more than 403% this year, bringing its market cap to $ 42.2 billion.
Read the full release announcing the deal here.