As part of the deal, Peloton will straight away acquire Precor’s fitness equipment manufacturing factories across four locations in the US This is like to help Peloton is dealing with some of its supply chain issues and meet the demand requirements.
On Monday, December 21, Peloton Interactive Inc (NASDAQ: PTON) announced its plans to acquire fitness equipment manufacturer Precor, in a deal worth a massive $420 million. The latest deal comes as Peloton plans to speed-up the production of treadmills and cycles to meet its delivery times.
The COVID-19 pandemic has pushed more people to work out from home. This has further pushed the demand for Peloton’s exercise equipment. The recent deal with Precor will help Peloton to meet up its production requirements. As per the information available, the deal is likely to close by early 2021. Also, Precor will operate as a business within Peloton on completion of the deal.
With this deal, Peloton will completely acquire Precor’s factories in North Carolina, Whitsett, Washington, and Woodinville. This also gives Peloton direct access to the manufacturing space of over 625,000 square feet. Peloton President William Lynch said:
“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”.
PTON Shares Jump 7% in Pre-Market
The Peloton share price is already 7% up in pre-market today. On Monday, the PTON share closed at a price of $144 with a market cap of $42 billion. The PTON stock has witnessed a massive run-up this year on the backdrop of the COVID-19 pandemic. The PTON share is up nearly 400% year-to-date.
However, it seems that all the worries for Peloton aren’t over yet. The company has been facing supply chain issues as customers have complained about delayed shipments and poor services. It looks like the latest Precor acquisition will help the company alleviate some of its problems.
Last month, Peloton said that it would be operating under supply constraints for the “foreseeable future” due to a massive spurt in demand for its equipment. Hopefully, things will settle for the good in the coming months.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
