Platoon Interactive Inc. plans to acquire a company to help it catch up with all the exercise bikes and treadmills customers ordered during the pandemic, and investors seemed to like the deal Monday afternoon.
PTON platoon,
announced on Monday afternoon that it has agreed to acquire another fitness equipment manufacturer, Precor, at a valuation of $ 420 million. The deal aims to help Peloton manufacture and supply more of its fitness equipment, after the company was inundated with orders after the COVID-19 pandemic closed gyms and people around the world were forced to take shelter in their homes.
Precor, a division of the privately-owned sporting goods company Amer Sports, based in Finland, has an established manufacturing facility in North Carolina, which will help Peloton develop US manufacturing capability. Peloton manufactures equipment in Taiwan, which affects its ability to provide equipment to US consumers.
“By bringing fitness equipment closer to the US consumer, Peloton will be able to deliver affiliate fitness products to members sooner,” the company said in its release.
Peloton revealed continued hot orders in November, but stocks were fooled when executives revealed that backlogs were ongoing and would continue for the foreseeable future. The company’s gross margins were affected as Peloton spent money to overcome logistical problems.
The companies expect the deal to close early in the new year, and Peloton expects it to start producing equipment manufactured in the US by the end of the year. Precor would function as a Peloton business unit, with current Precor president Rob Barker as the unit’s CEO and general manager of Peloton Commercial.
Shares of Peloton skyrocketed more than 7% in after-hours trading on Monday following the announcement of the merger deal.