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Peloton buys Precor

By

In a surprise move, Peloton – which finished its last financial quarter with US$2bn cash in the bank – has announced it's purchasing commercial fitness giant, Precor. The deal, worth US$420m, is expected to complete in 2021.

Precor will become a division of Peloton, with current Precor president, Rob Barker, becoming CEO of Precor and general manager of Peloton Commercial. He will report directly to William Lynch, president of Peloton.

The market liked the deal, with Peloton's share prices jumping 8 per cent at the news. Peloton's shares have climbed 403 per cent this year, due to record sales during the pandemic, taking it to a market capitalisation around US$42bn.

This increased demand for Peloton products, however, has led to challenges with supply and so the purpose of the Precor deal is in part to buy Peloton more manufacturing capacity.

“No one would wish a global pandemic on anybody, but it’s been a tailwind for our business,” Lynch has said. “Keeping up with that growth has been a big company priority.

“As we’ve been investing in scaling our manufacturing, this is an area where Precor is very strong,” he added.

Peloton will gain 625,000sq ft of factory space in North Carolina and Washington State, US, along with a 100-strong R&D team, in-house tooling and fabrication and a quality assurance set-up, enabling it to shorten time to market for its products, as it's existing manufacturing capacity is mainly in Asia.

Peloton, which hired former Hilton Hotels fitness and spa director, Ryan Crabbe in 2018, already has experience of supplying bikes to the hotel market. Now it's likely to drive this to another level by tapping into Precor's strength in the hospitality sector.

Peloton has also said it plans to make a range of connected fitness for the commercial market before the end of 2021.

It's also likely Peloton will aim to leverage Precor's relationships with its corporate and college customers. Precor has deals with organisations such as EXOS for tech integration, making these sectors a valuable source of sales.

With vaccines now being delivered, as we come out of the pandemic, the company will not be able to ride the boom in the home fitness market forever and may be seeking to broaden its trading base – potentially a sign of confidence in the health and fitness facility market.

However, speaking to Fit Tech magazine earlier this year, Peloton founder, John Foley said "Peloton will always be a B2C company," so perhaps the deal will see Precor pivoted partly to supply the consumer market. Time will tell.

Fundamentally, having manufacturing capacity on either side of the globe, R&D capabilities and access to both the B2B and B2C fitness markets – as well as things such as Precor’s tie up with Sony – puts the business in a position to move in almost any direction it chooses over the next five years.

This isn't Pelton's first acquisition – it bought Tonic Fitness Technology in Taiwan – one of the companies that make its bikes, in 2019. The US$47.4m deal enabled Peloton to better control its manufacturing output. It also bought digital music aggregator Neurotic Media in 2018.

Precor's owner, Finnish sporting goods company Amer Sports, is in turn owned by a group of investors including Chinese sportswear giant ANTA Sports, FountainVest Partners, Anamered Investments Inc and Tencent Holdings. There have been rumours of a potential sale for over a year.

FOOTNOTES

The deal comes as Mad Dogg Athletics, inventor of the Spinner bike, has issued court action against Peloton for patent infringements, as reported in HCM's sister magazine, Fit Tech.

For a recent interview with Peloton founder, John Foley, in Fit Tech magazine, click here.

Sign up here to get Fit Tech's weekly ezine and every issue of Fit Tech magazine free on digital.
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Peloton buys Precor

By

In a surprise move, Peloton – which finished its last financial quarter with US$2bn cash in the bank – has announced it's purchasing commercial fitness giant, Precor. The deal, worth US$420m, is expected to complete in 2021.

Precor will become a division of Peloton, with current Precor president, Rob Barker, becoming CEO of Precor and general manager of Peloton Commercial. He will report directly to William Lynch, president of Peloton.

The market liked the deal, with Peloton's share prices jumping 8 per cent at the news. Peloton's shares have climbed 403 per cent this year, due to record sales during the pandemic, taking it to a market capitalisation around US$42bn.

This increased demand for Peloton products, however, has led to challenges with supply and so the purpose of the Precor deal is in part to buy Peloton more manufacturing capacity.

“No one would wish a global pandemic on anybody, but it’s been a tailwind for our business,” Lynch has said. “Keeping up with that growth has been a big company priority.

“As we’ve been investing in scaling our manufacturing, this is an area where Precor is very strong,” he added.

Peloton will gain 625,000sq ft of factory space in North Carolina and Washington State, US, along with a 100-strong R&D team, in-house tooling and fabrication and a quality assurance set-up, enabling it to shorten time to market for its products, as it's existing manufacturing capacity is mainly in Asia.

Peloton, which hired former Hilton Hotels fitness and spa director, Ryan Crabbe in 2018, already has experience of supplying bikes to the hotel market. Now it's likely to drive this to another level by tapping into Precor's strength in the hospitality sector.

Peloton has also said it plans to make a range of connected fitness for the commercial market before the end of 2021.

It's also likely Peloton will aim to leverage Precor's relationships with its corporate and college customers. Precor has deals with organisations such as EXOS for tech integration, making these sectors a valuable source of sales.

With vaccines now being delivered, as we come out of the pandemic, the company will not be able to ride the boom in the home fitness market forever and may be seeking to broaden its trading base – potentially a sign of confidence in the health and fitness facility market.

However, speaking to Fit Tech magazine earlier this year, Peloton founder, John Foley said "Peloton will always be a B2C company," so perhaps the deal will see Precor pivoted partly to supply the consumer market. Time will tell.

Fundamentally, having manufacturing capacity on either side of the globe, R&D capabilities and access to both the B2B and B2C fitness markets – as well as things such as Precor’s tie up with Sony – puts the business in a position to move in almost any direction it chooses over the next five years.

This isn't Pelton's first acquisition – it bought Tonic Fitness Technology in Taiwan – one of the companies that make its bikes, in 2019. The US$47.4m deal enabled Peloton to better control its manufacturing output. It also bought digital music aggregator Neurotic Media in 2018.

Precor's owner, Finnish sporting goods company Amer Sports, is in turn owned by a group of investors including Chinese sportswear giant ANTA Sports, FountainVest Partners, Anamered Investments Inc and Tencent Holdings. There have been rumours of a potential sale for over a year.

FOOTNOTES

The deal comes as Mad Dogg Athletics, inventor of the Spinner bike, has issued court action against Peloton for patent infringements, as reported in HCM's sister magazine, Fit Tech.

For a recent interview with Peloton founder, John Foley, in Fit Tech magazine, click here.

Sign up here to get Fit Tech's weekly ezine and every issue of Fit Tech magazine free on digital.
More news
Les Mills has launched a new digital content solution to support health and fitness operators in engaging their members outside ...
Digital fitness content provider Wexer has launched its new software development kit (SDK), which allows the virtual fitness content hosted ...
Virtuagym, a leading provider of fitness technology for gyms and trainers, has announced the launch of PRO+, a new solution ...
Audio fitness app Auro has been named as the Official Training Partner for the Winter Run 2021. The virtual event ...
Goldman Sachs is leading a US$65m financing round in Echelon Fitness – a sign it believes the at-home fitness market ...
Life Time says it’s the first US health & fitness club company to embrace Apple Fitness+ and include it as ...
Mad Dogg Athletics, the company which created the Spinning bikes, has sued Peloton Interactive for patent infringement. A suit, filed ...
Apple has launched its long-awaited on-demand fitness platform, which will utilise the tech giant's ecosystem of hardware and software to ...
UneeQ, a United States and New Zealand-based digital human company, has worked with mental wellbeing platform Mentemia to transform famous ...
Les Mills On Demand has been named as the "Best At-home Workout" award for 2020 by USA Today, the internationally ...
The Fitness Industry Technology Council (FITC) has launched its inaugural Fitness Technology Innovation Awards. Looking to celebrate fitness tech innovations ...
How Will Fitness Evolve In 2021? Uscreen is the premier video monetization platform on a mission to enable fitness entrepreneurs, ...
Les Mills
Les Mills