The platoon will make a $ 420 million purchase to recover the remaining orders; stock jumps

Peloton Interactive Inc. intends to buy a company to help it recover all the exercise bikes and treadmills that customers ordered during the pandemic, and investors liked the deal on Monday afternoon.

PTON Platoon,
+ 3.25%
announced Monday afternoon that it had agreed to buy another exercise equipment manufacturer, Precor, at a valuation of $ 420 million. The agreement aims to help the Platoon manufacture and deliver more exercise equipment after the company was overwhelmed by orders after the COVID-19 pandemic closed gyms and forced people around the world to take shelter in their homes.

Precor, a division of Finland-based private sporting goods company Amer Sports, has a production facility based in North Carolina that will help Peloton develop its production capacity in the United States. Peloton manufactured equipment in Taiwan, affecting its ability to deliver equipment to American consumers.

“By bringing fitness equipment closer to American consumers, Peloton will be able to deliver connected fitness products to members earlier,” the company said in a press release.

Peloton revealed the continuation of hot orders in November, but the shares were hit when the directors revealed that the arrears of orders have continued and will continue in the foreseeable future. The company’s gross margins were affected as Peloton spent to overcome logistical difficulties.

The companies expect the transaction to end at the beginning of the new year, and Peloton expects to produce US-made equipment by the end of the year. Precor would operate as a Peloton business unit, with Precor’s current president, Rob Barker, acting as the unit’s CEO, and Peloton Commercial’s CEO.

Peloton shares rose more than 7% in trading after Monday, following the announcement of the merger agreement.