Peloton Looks To Boost US Manufacturing With $420M Precor Acquisition

Peloton Interactive Inc PTON said in a statement Monday that it had agreed to purchase fitness equipment maker Precor for $420 million.

What Happened: The New York-based fitness platform said, with the acquisition of Precor, it aims to establish manufacturing capacity in the United States, boost research and development capabilities, and accelerate penetration in the commercial market.

Precor will operate as a business unit within Peloton, post the completion of the deal. Precor President Rob Barker will serve as the company's CEO and as the general manager of Peloton Commercial following the purchase and report to Peloton President William Lynch.

“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 Lynch.

Precor, headquartered in the Greater Seattle area, is currently a division of Finnish sporting goods company Amer Sports.

Why It Matters: Peloton has seen its connected subscribers swell to more than 1.33 million and reported quarterly revenue of $757.9 million as of Q1 2021.

The company faces supply chain and delivery issues, UBS analysts noted last month. The analysts expressed optimism that Peloton would add capacity by the way of a new plant coming online shortly.

The exercise bicycle maker also faces increased competition from Apple Inc AAPL, whose Fitness+ service is expected to leave it trailing in subscriptions, according to Loup Ventures analyst Gene Munster. 

See Also: Peloton CEO Says Apple Fitness+ Legitimizes Exercise Market

Peloton said it wants to make connected fitness products in the U.S. before the end of the calendar year 2021 and the acquisition adds 625,000 square feet of manufacturing capacity in the country.

The acquisition will add a team of 100 research and development employees to Peloton’s existing research personnel. 

Price Action: Peloton shares traded nearly 8.3% higher at $156.31 in the after-hours session on Monday after closing 3.25% higher at $144.39.

Photo: Courtesy of Peloton