Peloton said Monday it plans to buy exercise equipment maker Precor for $ 420 million in a bid to speed up production cycles and treadmills and meet promised delivery windows.
Demand for Peloton exercise equipment increased during the coronavirus pandemic, tightening its supply chain as consumers sought to work from home during the pandemic.
As part of the transaction, Peloton will acquire Precor plants in Whitsett, North Carolina and Woodinville, Washington, which together have more than 625,000 square feet of manufacturing space. The agreement also enhances Peloton’s product development efforts by adding nearly 100 R&D staff to its existing staff.
Peloton shares increased by more than 5% when trading after the program.
The agreement will be concluded in early 2021. Once completed, Precor will operate as a business unit within the Platoon, the company said.
Current Precor President Rob Barker will become Precor’s CEO and CEO of Peloton Commercial, reporting to Peloton President William Lynch, the company said.
“By combining our talented and committed research and development teams and supply chain with the incredibly capable Precor team and their decades of experience, we believe we will be able to lead the global fitness market connected in both innovation and scale.” Lynch said in a statement.
When Peloton reported quarterly earnings in November, it warned that it would operate under supply constraints “for the foreseeable future” due to increased demand for its products. As sales increased, Peloton customers reported delays in poor deliveries and services.
Peloton expects Precor, known for its state-of-the-art commercial fitness equipment, to help the company enter the combined market in new markets, thanks to Precor’s existing relationships with US hotel chains, multifamily residences and university and corporate campuses globally.
At Monday’s close, Peloton’s shares rose more than 403 percent this year to $ 42.2 billion.
Read the full version announcing the deal here.