Peloton to get physical fitness devices maker Precor for $420 million

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Peloton to acquire fitness equipment maker Precor for $420 million

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Peloton shares skyrocketed Monday after the business revealed it prepares to get the workout devices producer Precor for $420 million, in a quote to accelerate production of its cycles and treadmills and satisfy its guaranteed shipment windows.

Its stock leapt more than 6% in after-hours trading.

Demand for Peloton’s workout devices has actually risen throughout the coronavirus pandemic, straining its supply chain, as customers aim to exercise in the house throughout the pandemic.

As part of the offer, Peloton will get Precor’s factories in Whitsett, North Carolina, and Woodinville, Washington, which integrated have more than 625,000 square feet of producing area. The offer likewise enhances Peloton’s item advancement efforts, by including almost 100 research-and-development workers to its existing personnel.

The offer is anticipated to close in early 2021. Once it is finished, Precor will run as an organization system within Peloton, the business stated.

Current Precor President Rob Barker will end up being CEO of Precor and basic supervisor of Peloton Commercial, reporting to Peloton President William Lynch, the business stated.

“By combining our talented and committed 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 in both innovation and scale,” Lynch stated in a declaration.

When Peloton reported quarterly profits in November, it alerted that it would be running under supply restrictions “for the foreseeable future,” due to the increased need for its items. As sales have actually risen, Peloton consumers have actually reported postponed deliveries and bad service. 

Peloton anticipates Precor, which is understood for its lower-end business physical fitness devices consisting of ellipticals and rowers, will assist present the combined business to brand-new markets, thanks to Precor’s existing relationships with U.S. hotel chains, multifamily homes and college and business schools, worldwide.

As of Monday’s market close, Peloton shares have actually risen more than 403% this year, bringing its market cap to $42.2 billion.

Read the complete release revealing the offer here.