Shares of Peloton rose on Monday when the company announced that it planned to buy exercise equipment manufacturer Precor for $ 420 million to accelerate production of its bicycle and treadmill and meet its promised delivery window .
Its stock rose more than 6% after hours of trading.
Demand for peloton’s exercise equipment increased during the coronovirus epidemic, with tension in its supply chain, as consumers want to work at home during the epidemic.
As part of the deal, Peloton will acquire Precore’s factories in WhatsApp, North Carolina and Woodville, Washington, which have more than 625,000 square feet of manufacturing space. The deal also increases Peloton’s product development efforts, adding about 100 research and development employees to its existing workforce.
The deal is expected to close in early 2021. Once it is completed, Precor will operate as a business unit within the peloton, the company said.
Current Precor President Rob Barker will become the CEO of Pretark and will report to Peloton President William Lynch, General Manager of Peloton Commercial.
Lynch said in a statement, “By combining our talented and committed R&D and supply chain teams with an incredibly capable Precor team and their decades of experience, we believe we can support both the innovation and scale of the global connected fitness market. Will be able to lead. ”
When the peloton reported quarterly earnings in November, it warned that it would operate under a “shortage of supply for the future”, due to increasing demand for its products. As sales have increased, peloton customers have reported delayed shipments and poor service.
Peloton hopes that Precor, known for its lower-end commercial fitness equipment, including ellipses and routers, will help jointly introduce the company to new markets, which include the US hotel chain, Multimily Residence globally. And Precore’s existing relationships with college and corporate campuses.
As of Monday’s close of the market, Peloton’s shares have risen by more than 403% this year, bringing its market cap to $ 42.2 billion.
Read here announcing the completion of the deal.