Peloton has announced that it intends to acquire Precor, one of the world’s largest suppliers of commercial fitness equipment. You probably recognize the Precor brand name if you’ve ever spent time in a hotel or standalone commercial gym, which is exactly why Peloton making this purchase makes a ton of sense at this particular time for the hot home-workout brand.
The Precor acquisition will be made via a deal that’s valued at a total of $420 million, and in addition to expanding its commercial business, this also helps Peloton bring on a lot more manufacturing capability in a time when its order queue for its Tread and Bike hardware is deeper than ever, thanks to the increase in demand resulting from the COVID-19 pandemic. Precor already maintains a significant U.S.-based manufacturing operation, as well as dedicated research and development teams and facilities. In total, Peloton says in a press release that it’ll be adding 625,000 square feet of manufacturing facility in the U.S., between Precor facilities in both Whitsett, North Carolina and Woodinville, Washington.
While the near-term use of the acquisition, which is set to close in 2021 if it meets all approvals, is to speed up delivery times for customers of existing equipment, long-term this deal sets Peloton up nicely for greater commercial market expansion — once the commercial market returns to growth. While the pandemic has been a clear boon for Peloton’s at-home equipment and fitness subscription service, it’s also been devastating for gym chains and hoteliers, meaning that it’s likely Precor’s primary business was taking a considerable hit over the past few months.
This is the largest deal that Peloton has made thus far, but it’s possible it picked up Precor for a relative bargain; Precor owner Anta Sports was said to have been seeking a potential sale of the company for around $500 million last November. Peloton will be installing Precor President Rob Barker as GM of Peloton Commercial as part of the new deal, and that should help it accelerate the infiltration of its connected equipment in commercial gyms globally once people feel more comfortable about returning to them safely post-pandemic.