(Adds background, deal details; Updates shares)
Dec 21 (Reuters) - Exercise bike maker Peloton Interactive Inc said on Monday it would buy peer Precor in a deal valued at $420 million as it looks to boost its U.S. manufacturing capacity and market share for fitness products.
Peloton’s shares, which have gained more than 400% this year, rose another 8% after the bell.
Demand for streaming exercise services and home work-out equipments soared during the COVID-19 pandemic from people largely working from home.
“We have seen a ton of growth. No one would wish a global pandemic on anybody, but it’s been a tailwind for our business,” Peloton President William Lynch said on Monday.
However, the surge in demand forced Peloton Chief Executive John Foley to say last month that wait time for certain products had been “unacceptably long.”
The acquisition adds 625,000 square feet of U.S. manufacturing capacity for Peloton with in-house tooling and fabrication, product development, and quality assurance capabilities in North Carolina and Washington. The company would be able deliver products to its customers sooner on the back of the addition.
Several of the components that go into the manufacturing of Peloton’s products are sourced internationally, including from China, according to the company’s regulatory filing in September.
Peloton’s biggest-ever deal, which is expected to close early next year, would also add more commercial establishments to its consumer base as Precor counts hotels, colleges and corporate campuses as its customers, Peloton said.
Precor, a provider of treadmills, stationary bikes and workout accessories, is a unit of Finnish sports equipment maker Amer Sports, which is owned by an investor consortium that includes Anta Sports and Tencent Holdings Ltd. (Reporting by Praveen Paramasivam in Bengaluru; Editing by Maju Samuel)