Peloton has struggled to reduce delivery delays and long wait times for customer service as the pandemic has increased demand for its products.
Photo: Ezra Shaw/Getty Images
Peloton Interactive Inc. PTON 11.65% has agreed to acquire commercial fitness-equipment provider Precor Inc. for $420 million in cash, in a move that will help it break into commercial markets and boost its manufacturing capacity at a time when the company is racing to meet demand.
Months into the pandemic, Peloton, known for selling $2,000-plus stationary bikes equipped with screens that show subscription workout classes, has struggled both with reducing delivery delays and long wait times for customer-service support as the pandemic drives a surge in demand for its connected stationary bikes and treadmills.
Peloton has attributed the delays to shipping logjams, particularly at ports as the bikes are transported to the U.S. from manufacturers overseas.
The deal with Precor will help bring some of that manufacturing home. Precor has two U.S.-based manufacturing facilities, which will join Peloton’s network of third-party manufacturers and its Tonic facilities in Taiwan, the company said.
“By making fitness equipment closer to U.S. consumers, Peloton will be able to deliver connected fitness products to members sooner,” the company said.
Peloton’s shares, which have surged 475% this year, rose 12% to $161.21 on Tuesday.
In addition to its offices in the Americas, Precor has offices in Europe, the Middle East and Africa, and the Asia-Pacific region.
Peloton said the deal will also help it expand its research-and-development capabilities, as well as advance its penetration in commercial markets such as in hotels, multifamily residences, and college and corporate campuses. When the deal closes, Peloton’s products will be made available to Precor’s commercial customers in Peloton’s existing markets, the company said.
Peloton also plans to make several connected fitness products in the U.S. next year.
“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,” said Peloton President William Lynch.
Precor, of Woodinville, Wash., will run as a business unit within Peloton, the company said. Precor President Rob Barker will hold the titles of chief executive officer at Precor and general manager at Peloton Commercial. He will report to Mr. Lynch.
Precor is a unit of Finnish sporting goods company Amer Sports Corp., which is owned by an investor consortium that includes Tencent Holdings Ltd. , ANTA Sports Products Ltd. , FountainVest Partners, and Anamered Investments Inc.
The deal is slated to close in early 2021.
Write to Kimberly Chin at [email protected]
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the December 23, 2020, print edition as ‘Peloton Buys Precor, A Fitness-Gear Firm.’
