Peloton shares soared Monday after the company announced plans to acquire the manufacturer of Precor exercise equipment for $ 420 million, in a bid to accelerate their bikes and treadmills and meet the requirements. promised delivery windows.
Its stock jumped more than 6% in after-hours trading.
Demand for Peloton exercise equipment has increased through the coronavirus pandemic, stressing its supply chain, as consumers look to work out at home during the pandemic.
As part of the deal, Peloton will acquire Precor factories in Whitsett, North Carolina, and Woodinville, Washington, which together have more than 625,000 square feet of manufacturing space. The agreement will also strengthen Peloton’s product development efforts, adding nearly 100 existing research and development staff.
The deal is expected to close in early 2021. Once completed, Precor will operate as a business unit within Peloton, the company said.
Precor General President Rob Barker will become CEO of Precor and general manager of Peloton Commercial, reports to Peloton President William Lynch, the company said.
“By combining our talented and dedicated R&D and Supply Chain teams with Precor’s incredibly capable team and decades of experience, we believe we can lead the global connected fitness market both in a new way. customization and scale, “Lynch said in a statement.
When Peloton announced quarterly earnings in November, it warned that it would operate under “future” supply constraints, due to the high demand for its products. As sales have skyrocketed, Peloton customers have reported delays in shipments and poor service.
Peloton expects Precor, known for its low-end commercial fitness equipment incorporating ellipticals and rowers, to help bring the company together into new markets, thanks to for Precor’s relationships with U.S. hotel chains, multidisciplinary residences and college and corporate campuses, worldwide.
As Monday’s market closes, Peloton shares have risen more than 403% this year, bringing its market to $ 42.2 billion.
Read the full release announcing the deal here.