What happened
Special purpose acquisition companies (SPACs) have been all over the news lately for mergers in the electric vehicle sector. But a deal was announced today with what may be a more familiar company. Shares in Forest Road Acquisition (NYSE:FRX) were 7.8% higher at the close Wednesday after the SPAC announced plans for a three-way merger that will bring The Beachbody Company public.
So what
The SPAC announced that it intends to complete the merger with Beachbody and MYX Fitness valued at almost $3 billion after the boards of both Beachbody and MYX Fitness have unanimously approved the transaction.
Image source: Getty Images.
Now what
The combination is aimed at capitalizing on the popularity of at-home fitness applications. "With brands such as P90X, INSANITY and 21 Day Fix, Beachbody has consistently expanded its market share over the past two decades through its proven model of integrating the most comprehensive library of premium fitness content with easy-to-follow nutrition guidance and supplements," Forest Road said in a statement.
The newly combined company will have 2.6 million paid digital fitness subscribers with 96% month-over-month retention. By combining digital subscriptions, connected fitness, and growing consumer demand for health and wellness, Forest Road believes it is tapping into a growing segment of the market.
It believes a valuation of two times 2022 estimated revenue is an attractive entry point for investors. Today's positive (but subdued) move in the stock gives investors an opportunity to enter at close to that valuation.
