Peloton Shares Move Higher on Possible Takeover Talks

Fitness machine maker Peloton saw its shares head higher after potential takeover talks emerged.

The fitness company has attracted interest from outsiders and according to reports, Amazon and Nike are both potential suitors.

The talks are preliminary according to a person familiar with the matter who spoke to CNBC. The source also said that Peloton has yet to kick off a formal sales process.

Activist firm Blackwells Capital has urged Peloton to sell itself, and CEO John Foley and other insiders have a lot of voting power within the company. Foley along with other Peloton insiders had a combined voting control of roughly 80% as of Sept. 30, making it practically impossible for any deal to go through without their approval.

Peloton’s shares soared almost 21% on Monday, closing slightly above the company’s debut price of $29.

One analyst thinks Apple is “aggressively involved,” too according to a CNBC report.

Baird analyst Jonathan Komp remarked that Foley likely won’t be willing to sell, unless there is enough internal pressure stemming from Peloton’s recent stock sell-off. Foley’s management team has had “unwavering confidence” in its ability to achieve its longer-term goals as a stand-alone business, the analyst said.

Wedbush analyst Tom Nikic chimed in and said, “The Peloton brand might not be as strong as it used to be.” The analyst cited recent unfavorable portrayals of the Peloton name in two popular TV shows, as well as a treadmill recall that Foley initially pushed back against as examples. “A deal with Peloton could detract Nike from its core sneaker and apparel business,” he added.

Cowen & Co. analyst John Blackledge said a deal is unlikely for Peloton, given that the company is still in the “early innings” of growth in the global fitness industry.

BMO Capital Markets analyst Simeon Siegel said he is skeptical of the value that Peloton would bring to any major tech company, or an athletic apparel giant such as Nike, “given its comparably small size, faltering demand and declining engagement.”

Peloton is scheduled to report its fiscal second-quarter financial results after the market closes on Tuesday.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.