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Peloton’s stock pedaled higher on Tuesday after the stationary-bike startup revealed acquisition plans to help speed up production amid surging demand.
New York-based Peloton’s shares climbed more than 15 percent to an intraday record of $166.23 on the $420 million deal to buy fitness equipment maker Precor, announced Monday afternoon.
The deal — expected to close in early 2021 — gives Peloton access to Precor’s 625,000 square feet of manufacturing capacity in North Carolina and Washington State, allowing it to make its bikes and treadmills closer to American consumers and deliver them sooner, the company said.
The acquisition will aid Peloton’s entry into the commercial fitness market, where Precor is a major player.
The deal comes as Peloton’s customers have reportedly been forced to wait months for their fitness gear as the company has struggled to handle a surge in demand as consumers seek to exercise at home instead of the gym due to the coronavirus.
Precor will also make Peloton’s products available to a wider audience through its existing relationships with hotels, college and corporate campuses, and multifamily residential buildings. And the deal will add almost 100 research and development employees to Peloton’s staff to help the company “design and create the next generation of connected fitness experiences,” according to a news release.
“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,” Peloton president William Lynch said in a statement.
The company said it had more than 1.3 million connected fitness subscriptions in the July-to-September quarter, up from 563,000 in the year-earlier period.
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