Peloton, New York, has entered into an agreement to acquire Precor, Woodinville, Washington, for $420 million from Finnish sporting goods company Amer Sports, according to a Dec. 21 announcement by Peloton. The transaction is expected to close in early 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 general manager, Peloton Commercial. He will report to Peloton President William Lynch.
With the acquisition, Peloton plans to establish U.S. manufacturing capacity, boost research and development capabilities and accelerate Peloton’s penetration of the commercial market, the company said.
Peloton has experienced a tripling of sales during the COVID-19 pandemic and health club shutdowns, reporting $2 billion in sales in its last quarter, but the company’s plant in Taiwan was not able to keep up with the demand, the company reported, causing a drop in stock prices.
The late-day Precor acquisition announcement caused Peloton stock prices to jump 7 percent in after-hours trading.
Precor’s two U.S. facilities in Woodinville, Washington, and Whitsett, North Carolina, will join Peloton’s existing manufacturing network with its third-party manufacturers and its Tonic Fitness Technology facility in Taiwan. Precor has 625,000 square feet of U.S. manufacturing capacity with in-house tooling and fabrication, product development and quality assurance capabilities, allowing Peloton to control the entire production process and increase production scale as well as deliver products to U.S. consumers faster, Peloton said.
Peloton plans to produce connected fitness products in the United States before the end of the calendar year 2021.
In addition to greater manufacturing capabilities, the acquisition adds a team of nearly 100 research and development employees to Peloton’s R&D team. The Precor team will work with the Peloton R&D team to design and create the next generation of connected fitness experiences.
Precor will continue to service its global network. But 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. Under the Peloton umbrella, Precor will allow Peloton to bring its product to more people through Precor’s relationships with hotels, multifamily residences, and college and corporate campuses, according to Peloton.
For the year 2018, Precor had sales of $426 million, according to the last Precor financials available to Club Industry. At that time, its parent company, Amer Sports, was a public company and regularly reported its financials. In March 2019, Amer Sports was purchased by China-based Anta Sports Products Limited, which took Amer Sports private. Financials were no longer publicly reported after that.
Peloton went public in September 2019. Prior to that, it purchased digital music aggregator Neurotic Media. Since going public, it purchased Tonic Fitness Technology in Taiwan, one of the companies that makes its bikes.
Peloton is facing a lawsuit filed earlier this month by Mad Dogg Athletics alleging that Peloton is infringing on patents held by Mad Dogg. Peloton has not yet responded to a request by Club Industry for comment on that lawsuit.