Peloton announced that it has entered into an agreement to acquire Precor, one of the largest commercial fitness equipment providers with a significant U.S. manufacturing presence, in a transaction valued at $420 million.
With the acquisition, Peloton plans to establish U.S. manufacturing capacity, boost R&D capabilities with Precor’s team and accelerate Peloton’s share of the commercial market. Peloton plans to produce connected fitness products in the U.S. before the end of the calendar year 2021.
Subject to the completion of the transaction, Precor will operate as a business unit within Peloton. Precor President Rob Barker will become CEO, Precor and GM, Peloton Commercial, reporting to William Lynch, Peloton’s president. Precor is a division of Finnish sporting goods company Amer Sports, which is owned by an investor consortium including Anta Sports, FountainVest Partners, Anamered Investments Inc., and Tencent Holdings Limited.
The transaction is expected to close in early calendar year 2021.
“Precor embodies the Peloton mission of putting Members first. Over the last few months, we’ve gotten to know the team and saw firsthand how much they care about their products, customers and, last but not least, their employees. 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’s Lynch. “We’re looking forward to integrating the Precor team into Peloton and excited about what this means for the future of our brand and our ability to continue delivering world-class Member experiences.”
“Precor is driven to create personalized health and fitness experiences that help people live the lives they desire. That passion has led us to create highly customizable solutions running on the fitness industry’s largest commercial network,” said Barker, Precor’s President. “The Precor team is excited to combine our manufacturing expertise and more than 40 years of equipment innovations with Peloton’s award-winning workout experiences to help commercial customers succeed and keep exercisers moving.”
Establishing U.S. Manufacturing
The acquisition adds 625,000 square feet of U.S. manufacturing capacity with in-house tooling and fabrication, product development and quality control capabilities in Whitsett, NC and Woodinville, WA. Peloton will be able to control the production process from design to ship and increase total production scale while maintaining product quality. By making fitness equipment closer to U.S. consumers, Peloton will be able to deliver connected fitness products to its member sooner.
The Precor U.S. facilities will join Peloton’s existing manufacturing network with its third-party manufacturers and the Tonic facilities based in Taiwan. Once the transaction closes, the Precor U.S. facilities will provide Peloton with incremental operational scale and flexibility to support the growth of its connected fitness product line.
Investing More In R&D
The acquisition would add a team of nearly 100 dedicated research and development employees to Peloton’s R&D team. With years of experience designing and engineering cardio and strength fitness equipment and user experiences, the Precor team plans to work with the Peloton R&D team to design and create the next generation of connected fitness experiences.
Scaling Peloton Commercial Offerings
Precor is one of the largest commercial fitness equipment providers in the world with 40 years of experience and expertise building a customer-focused business at scale. Under the Peloton umbrella, Precor plans to make the Peloton experience accessible to more consumers through its relationships with hotels, multifamily residences, and college and corporate campuses. Precor will also continue to service its global network. When the transaction closes, the parties plan to make Peloton connected fitness products available to Precor’s broader network of commercial customers in Peloton’s existing markets.
Fenwick & West LLP is serving as legal advisor to Peloton. Citi is serving as the sole financial advisor to Amer Sports and its investor consortium, and Kirkland & Ellis LLP is serving as their legal advisor. For additional information, refer to the Peloton Investor Relations website.
