Amazon is exploring offer for Peloton -source
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[February 05, 2022] (Reuters)
-Peloton Interactive Inc has drawn interest
from potential buyers including e-commerce giant Amazon.com Inc,
according to a person familiar with the matter, as the exercise bike
maker struggles to maintain pandemic-fueled growth.
Shares of Peloton surged 30% in extended trading on the news, which
comes days after activist investor Blackwells Capital urged the
company's board to put it up for sale.
Amazon is exploring an offer for Peloton and is speaking with advisers
about whether and how to proceed, a source said. Peloton has not yet
decided whether it will explore a sale, according to the source.
Peloton did not immediately respond to a Reuters request for comment,
while Amazon declined to comment.
Peloton sales boomed during COVID-19 lockdowns, with many snapping up
home fitness equipment. But its fortunes began to fade as vaccinations
increased, gyms reopened and rivals offered competitive products.
In November, it hinted that demand for its exercise bikes and treadmills
was slowing faster than expected, and its market capitalization since
then has shrunk to about $8 billion from a peak of nearly $52 billion in
early 2021.
If the stock's gains hold on Monday, Peloton could reach the $10 billion
market-capitalization threshold.
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Last week, Blackwells Capital called on the board of Peloton to remove
CEO John Foley immediately, accusing him of deals that set high fixed
costs and for holding on to excessive inventory, while misleading
investors about the need to raise capital.
Blackwells criticized Foley for hiring his wife as a key executive and
committing to a 300,000-square-foot, 20-year lease for office space in
New York, among other things.
The investment firm, run by Jason Aintabi, has also urged the board to
put the company up for sale to a buyer like Walt Disney Co, Apple Inc,
Sony Group or Nike Inc, Reuters reported on Sunday.
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![](../images/020522pics/busine17.jpg)
A Peloton exercise bike is seen after the ringing of the opening
bell for the company's IPO at the Nasdaq Market site in New York
City, New York, U.S., September 26, 2019. REUTERS/Shannon Stapleton
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Peloton has tried to cushion the blow to its growth by cutting the price of its
popular bike and ramping up its ad spending, but growth remains stagnant.
Last month, Peloton said the company was reviewing the size of its workforce and
"resetting" production levels, following a report that it was temporarily
halting production of connected fitness bikes and treadmills after a significant
drop in demand.
While many investors have become frustrated with Peloton due to a steep drop in
its share price, analysts also note that the company may be a difficult
acquisition target because of its two classes of stock, effectively allowing
insiders to control it.
The news was first reported by the Wall Street Journal. (https://on.wsj.com/3AVMIf7)
The growth in the fitness band market has prompted tech giants such as Apple Inc
and Samsung to introduce features for health tracking, including
electrocardiogram and blood pressure sensor. Alphabet Inc-owned Google closed
its acquisition of fitness tracking company Fitbit Inc in January.
Tech giants including Amazon and Alphabet have also seen a rise in their
valuation after blockbuster results this week. A day after Facebook owner Meta
Platforms suffered the deepest loss of stock market value in history for a U.S.
company, Amazon logged the greatest ever one-day increase in value.
(Reporting by Rithika Krishna, Tiyashi Datta and Nivedita Balu in Bengaluru and
Greg Roumeliotis in New York; Editing by Devika Syamnath, Peter Henderson and
Anil D'Silva)
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