Peloton Interactive Inc. plans to acquire a company to help it catch up with all of the exercise bikes and treadmills that customers have been ordering during the pandemic, and investors seemed to like the deal Friday afternoon.
Peloton
PTON,
+3.25%
announced Monday afternoon that it has agreed to acquire another manufacturer of exercise equipment, Precor, at a valuation of $420 million. The deal is aimed at helping Peloton manufacture and deliver more of its exercise equipment, after the company was overwhelmed with orders after the COVID-19 pandemic shut down gyms and forced people across the world to shelter in their homes.
Precor, a division of privately owned sporting-goods company Amer Sports out of Finland, has an established manufacturing facility in North Carolina, which will help Peloton develop U.S. manufacturing capability. The company has been doing its manufacturing in Asia, which has also affected its ability to deliver equipment to American consumers.
Peloton revealed continuing hot orders in November, but shares were pummeled when executives revealed that order backlogs continued and would continue for the foreseeable future. The company’s gross margins were affected as Peloton spent to overcome the logistics difficulties.
Peloton stock shot up more than 5% in after-hours trading Friday following the announcement of the merger agreement.
