Peloton will acquire Precor, a hotel and university fitness equipment maker, for $420 million.
The at-home fitness firm announced the acquisition Monday, and said the deal will close in early 2021. The deal is Peloton's largest to date, according to Bloomberg.
Peloton said the deal gives the company 625,000 square feet of US manufacturing space and allows it to accelerate the growth of its commercial business.
"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 release.
Precor sells fitness equipment like ellipticals and treadmills to hotels, universities, fire departments, and health clubs.
Peloton sales spiked in 2020 when gyms closed due to the COVID-19 pandemic and more Americans invested in at-home fitness. The company announced September was its first profitable quarter, with sales increasing 172% year-over-year.
Peloton's acquisition of Precor comes as the battle for the at-home fitness market heats up. Apple launched a Fitness+ service for $9.99 that allows iPhone, iPad, and Apple TV users to access exercise classes. Peloton stock tumbled 3% after Apple's early December announcement. Echelon Fitness, which describes itself as the "most formidable competitor of Peloton," sells bikes cheaper than Peloton's nearly $2,000 model, and reported a sales increase of 700% year-over-year in September.
Peloton has had multiple legal challenges over the years from competitor fitness companies. The company sued Flywheel in 2018 for allegedly creating a copy version of its proprietary bike. NordicTrack filed a lawsuit against Peloton in October for copyright infringement.
Peloton stock had increased by 7% in after-hours trading Monday following the announcement.