Peloton announced that it will acquire Precor, one of the world's largest providers of commercial fitness equipment. You will likely recognize the Precor brand name if you've ever spent time in a hotel or stand-alone commercial gym. This is precisely why Peloton making this purchase makes a lot of sense for the Hot Home Workout brand at this point.
The acquisition of Precor comes through a deal valued at $ 420 million. In addition to expanding its trading business, Peloton can add significantly more manufacturing capacity at a time when the order for Tread and Bike is queued, and hardware is deeper than ever thanks to increasing demand from the COVID-19 pandemic. Precor already has a significant US manufacturing facility and dedicated research and development teams and facilities. Overall, Peloton said in a press release that a 625,000 square foot manufacturing facility will be added between Precor plants in Whitsett, North Carolina and Woodinville, Washington, USA.
While the short-term use of the acquisition, which is expected to close in 2021 when all approvals have been met, is expected to shorten delivery times for customers of existing equipment, Peloton is well-positioned for greater commercial market expansion in the long term. as soon as the commercial market grows again. While the pandemic was a definite boon to Peloton's home equipment and fitness subscription service, it was devastating to fitness chains and hoteliers as well, meaning Precor's main business has likely seen significant success in recent months.
This is the biggest deal Peloton has made to date, but it's possible he picked Precor for a relative bargain. Precor owner Anta Sports is said to have targeted a potential sale of the company for around $ 500 million last November. Peloton will install Precor President Rob Barker as the GM of Peloton Commercial under the new contract. This should help accelerate the infiltration of its connected devices into commercial gyms around the world once people feel more confident to return to them safely after the pandemic.