Several private equity firms are thinking about buying Peloton, the company that makes connected fitness equipment, as it tries to deal with its debts and start growing again after 13 quarters of losing money, CNBC reported.
In recent months, Peloton has talked with at least one firm about becoming a private company, but it’s not clear how interested they are. Other private equity firms are also looking at Peloton, but we don’t know if they’ve talked to Peloton formally.
These firms are looking at ways to reduce Peloton’s costs to make buying the company more appealing. Last week, Peloton announced a plan to cut its expenses by more than $200 million by 2025.
After the report, Peloton’s stock went up by more than 18% before the market opened.
But there’s no guarantee that Peloton will be bought, and it might stay a public company. The people who knew about these talks didn’t want to be named.
Peloton has become a target for buyouts because its market value has dropped from $49.3 billion in January 2021 to about $1.3 billion now.
Peloton makes money from subscriptions and has many loyal users, but its equipment is expensive to make and has had some big problems like recalls. Plus, with people not wanting to spend a lot of money because of the pandemic, there’s not a huge demand for expensive home exercise gear.
In the last two years, Peloton has been struggling to make more sales, make money, and be profitable. Sales of its equipment have dropped, and its costs are too high for its size.
Last week, Peloton said its CEO would leave after it had a bad earnings report. On the same day, it said it would cut about 400 jobs, which is 15% of its workforce because it needs to spend less money.
Most of the savings from these cuts will come from the job cuts, but Peloton will also spend less on marketing, research, and other things. This will make it easier for Peloton to make money, even if it doesn’t sell more, and make it more attractive to the private equity firms interested in buying it.
Peloton also has a lot of debt, about $1.7 billion. It owes $692.1 million on a loan, which it might have to pay back by November 2025, and $991.4 million on some bonds, which are due in February 2026.
A person close to the company, Peloton said they don’t expect any problems with dealing with their debt.
Last week, Peloton said it’s working with JPMorgan and Goldman Sachs to come up with a plan to deal with its debt.
“We want to lower our debt and give ourselves more time to pay it back at a reasonable cost,” Peloton said. “We’re happy with the help we’re getting from our lenders and investors, and we’ll share more about this soon.”
