Beachbody’s SPAC Merger With Peloton Rival Mints A New Billionaire

The SPAC craze has minted yet another billionaire in the latest example of blank-check companies leading to new members of the three-comma club. Santa Monica-based Beachbody—the exercise-DVD and weight-loss-shake-hawking multilevel marketing business that’s morphed into an online fitness brand—went public on the New York Stock Exchange on Monday in a merger with exercise bike maker Myx Fitness and Forest Road Acquisition Corp., a blank check company with ties to former NBA star Shaquille O’Neal and former TikTok CEO Kevin Mayer. Beachbody CEO and chairman Carl Daikeler, who founded the company in 1998, is now a billionaire thanks to his 43% stake, worth $1.7 billion as of 9:45 am ET on Monday.

The goal of the merger is to build the new company into a direct competitor to leading fitness brands such as Peloton and Lululemon—which purchased fitness device maker Mirror for $500 million in June 2020—by combining Beachbody’s fast-growing digital subscription business and library of live and on-demand workout classes with Myx’s touchscreen-equipped exercise bike, a cheaper alternative to Peloton. Myx’s exercise bike is listed at $1,299 on its website, compared to $1,895 for the lowest-priced Peloton bike package.

Myx Fitness is a relative newcomer and a small fry in the world of exercise bikes. It had just under $30,000 in revenues from selling its bikes in 2020. Beachbody, meanwhile, posted a net loss of $21 million on sales of $864 million in 2020, down from a $32 million net profit on $756 million in revenues in 2019.

“This marks an important milestone in Beachbody’s mission to help more people achieve their goals and lead healthy, fulfilling lives,” Daikeler, 57, said in a statement announcing the merger on Monday. “With this transaction, we will deploy capital to grow our platform, add connected fitness hardware through the acquisition of Myx and continue to create the most exciting and innovative in-home fitness content.”

A spokesperson for Beachbody did not respond to a request for comment on Daikeler’s net worth.

As Forbes detailed in a 2018 article, Daikeler grew up outside Philadelphia and graduated from Ithaca College with a bachelor’s in corporate organizational media in 1986. He then worked as a producer for halftime shows at televised football games. In 1987, he quit to start making fitness infomercials, a business that later evolved into filmed fitness workouts in the 1990s. He cofounded workout video firm TelAmerica Media in 1994, selling 2 million copies of its hit video “Buns of Steel,” before selling his stake and moving back to the infomercial world. After two years at a phone dating service and a referral service for Lasik eye surgery, he launched Beachbody in 1998 with his coworker Jon Congdon and $500,000 from angel investors.

“What I learned was that solving my own problem—that I don’t like to work out and I eat like a second-grader—was a scalable opportunity,” he told Forbes in 2018, when his stake in the company was valued at an estimated $660 million.

Beachbody’s first runaway success was P90X, a three-month boot camp that’s since been extolled by the likes of Michelle Obama and former U.S. Speaker of the House Paul Ryan. Daikeler and Congdon built the company into a multilevel marketing giant with more than 400,000 “coaches” selling workout videos, weight-loss shakes and other supplements on social media. In 2015, Daikeler took a risky bet by launching Beachbody on Demand, a Netflix-like service offering the company’s entire library of workout videos (worth $7,000 if you purchased them all) for $99 a year. While painful in the short-term—the number of coaches shrank from 450,000 in 2016 to 340,000 in 2018—that strategy paid off in 2020, when the pandemic shut gyms across the country and people turned to live-streamed workouts and home fitness.

In early 2019, Congdon started Openfit, another live fitness class service priced at $19 a month and owned by Beachbody, which also took off in 2020 and helped grow the company’s paid digital subscriptions by 53% to 2.6 million, compared to Peloton’s 3 million. (Congdon’s roughly 6% stake in Beachbody is worth about $220 million as of 9:45 am ET). Live fitness also presents an opportunity for Beachbody to diversify beyond health foods, supplements and its Shakeology drinks, which brought in two thirds of overall revenue in 2019. The shake business, though, drew legal scrutiny a few years ago: In 2017, following an investigation by the city attorney of Santa Monica, the company reached an agreement to pay a $3.6 million settlement and agreed to stop making certain health claims about its shakes. Still, the company is investing further in the nutrition market with a celebrity-backed health food play: In December 2020, it acquired LeBron James and Arnold Schwarzenegger’s sports nutrition company Ladder for $28 million.

While Beachbody’s $864 million in sales last year were an improvement on the $756 million in 2019, they represent a steep drop from the $1 billion that Beachbody told Forbes it had in 2017 revenues. Its merger with Myx Fitness allows Daikeler to hedge his bets by repositioning Beachbody as an integrated home fitness company competing with the likes of Peloton and iFIT, the parent company of NordicTrack and ProForm.

“In the same way that streaming opened up the media world, home fitness is opening up the exercise ecosystem,” says Simeon Siegel, a senior analyst at BMO Capital Markets. “There’s a long runway ahead for companies that are able to offer a compelling product and compelling content.”