Peloton will pay $420 million to acquire fitness equipment maker Precor

The deal could alleviate troublesome shipping and supply issues.

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CANADA, TORONTO, ONTARIO - 2018/12/20: Part of a 'Peloton' gym bicycle which is in exhibit on a luxurious store located in Yonge Street. Downtown district of the Canadian city. (Photo by Roberto Machado Noa/LightRocket via Getty Images)
Roberto Machado Noa via Getty Images

Home fitness tech has been on a tear in 2020, and one major player is gearing up to capitalize on shifting workout habits for the long haul. In a press release, Peloton today confirmed its plans to acquire Precor, a maker of home and commercial-grade workout machines, for $420 million. The deal is expected to close by the end of 2021.

Like a slew of other connected fitness companies, Peloton saw its business surge this year as stay-at-home orders forced exercise buffs out of gyms and into their homes. To complicate matters, the early days of the pandemic were marked by notable shortages of — among other things — free weights, yoga blocks and certain other types of workout equipment, meaning people were on the hunt for valuable alternatives. It didn’t take long for Peloton’s focus on specialized spin bikes and treadmills that tied into guided, streaming workouts to spike in popularity (again), to the point where the company’s global membership base more than doubled in a year.

Problem was, Peloton was relatively ill-equipped to handle all that new demand, even after doubling its production capacity and spinning up a new factory in Taiwan. That’s where Precor comes in: In addition to operating as a business unit inside Peloton, its 625,000 feet of manufacturing space split between Whitsett, North Carolina, and Woodinville, Washington will eventually be used to churn out new Peloton Treads and Bikes.

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The fact that future Peloton gear will be produced at least in part in the United States should eventually mean an end to the delays that have plagued many recent orders. And beyond that, Precor’s existing relationships with schools, hotels and gym chains could give Peloton a viable route into new facilities once COVID-related restrictions are lifted.

“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,” said Peloton president William Lynch.

The company says the first US-made Peloton hardware will roll off the lines “before the end of calendar year 2021,” which should put the combined company in a solid position to ramp up its business even further. The bigger question is whether people’s passion for Peloton hardware sticks after the pandemic fully and finally passes — for now, though, the company is committed to going big.

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