Peloton buys Precor for $420 million in a bid to dominate hotels, college campuses and offices
Say goodbye to boring gym equipment on your vacation or during a midday workout at the office.
Because Peloton (PTON) just took a giant leap in getting its connected bikes and treads outside of the comfy confines of your home. The fitness player disclosed Monday evening it will spend $420 million to buy commercial fitness giant Precor.
Precor will become a division inside of Peloton, with the company’s president Rob Barker reporting to Peloton president William Lynch. The acquisition gives Peloton 625,000 square feet of U.S. manufacturing capacity with in-house tooling and fabrication, product development, and quality assurance capabilities in North Carolina and Washington.
That manufacturing capacity will be used to make Peloton equipment for Precor’s bread and butter customers in the hotel, corporate and college campus spaces. Peloton says it plans to make connected fitness products for the commercial market before the end of calendar year 2021.
“Precor embodies the Peloton mission of putting Members first. Over the last few months, we’ve gotten to know the team and saw firsthand how much they care about their products, customers and, last but not least, their employees. 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,” Lynch said in a statement.
Peloton is proving to be creative in the use of its cash pile. Rather than overpay for a new piece of connected hardware, the company has spent in more strategic areas to boost its own brand.
Nearly two months after going public in September 2019, Peloton acquired one of its bike manufacturers Tonic Fitness Technology in Taiwan. The purchase — which cost $47.4 million — helped Peloton better control its flow of products to market. That will prove critical as Peloton moves to expand its product line as it has done recently with the introduction of a revamped bike and a cheaper treadmill. It marked the company’s second acquisition.
Back in June 2018, Peloton made its first acquisition — scooping up digital music aggregator Neurotic Media for an undisclosed sum.
“The challenge is that there's not that many awesome innovative technology companies in the fitness category or around the fitness category,” Peloton founder John Foley told Yahoo Finance in a Sept. 14 interview. “So one of the reasons why Peloton is doing well is just there hasn't been that much innovation, or capital or software or content for that matter going into the fitness category. So we will keep our ear to the ground. We will be acquisitive when it makes sense, but it's a more shallow pool of targets than you want it to be.”
Peloton ended its most recent quarter with $2 billion in cash.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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