Amazon, Nike Exploring Potential Bid To Buy Peloton
Amazon and Nike are independently exploring the option to acquire Peloton as the bike maker struggles to sustain its pandemic-fueled growth.
Peloton’s shares surged by 30% in extended trading after the news broke, just days after activist investor Blackwells Capital urged the company’s board to put the company up for sale as a path forward.
While Peloton has not yet announced whether it will proceed with a sale, Amazon is consulting with advisers about the potential for buying the company. Similarly, Nike is weighing the benefits of such a deal, although it has not yet held talks with Peloton, Reuters reported.
The acquisition talks follow Peloton’s recent struggles with both its legal challenges and its inability to drive sales in the face of reopening of gyms and growth in competition from rival brands. In November 2021, Peloton said demand for its products was slowing faster than expected. Since then, the company’s market cap has shrunk to $8 billion, a significant downfall from its peak of approximately $52 billion earlier in the year.
There’s more to Peloton’s ongoing troubles. Last week, Blackwells Capital called on the company’s board to immediately fire CEO John Foley, who allegedly made deals that set high fixed costs and held onto excessive inventory, all the while misleading investors to raise additional capital. Blackwells also criticized Foley for appointing his wife as a key executive and for committing to a 20-year lease for a 300,000 square office space in New York.
A potential acquisition deal might still be complicated for Peloton because of its two classes of stock, which give insiders the ability to control the company.
Originally published at https://retailbum.com on February 7, 2022.
