VANCOUVER, WA (BRAIN)—Fitness company Nautilus has entered into definitive agreements for the sale of certain assets of its commercial business to Fit Dragon International.
The agreements provide for the sale of certain assets of StairMaster and Schwinn Fitness, including the licensing of indoor cycling products of the Schwinn Fitness brand for use in the commercial channel. The company retains certain rights to the Schwinn brand and will continue to market Schwinn fitness products in the consumer channel, including both retail and direct to consumer. The transactions are subject to customary conditions to closing and are scheduled to close on or before December 30, 2009.
The company had previously announced its intention to divest itself of its commercial business in order to enable its team to invest all resources on its branded consumer retail and direct businesses. The agreements do not involve Schwinn products, which are sold in the retail and direct sales channels, which Nautilus will continue to sell.
“We believe this is an important step towards our goal of focusing exclusively on our direct and retail channels,” said Edward Bramson, CEO of Nautilus. “The Schwinn and StairMaster brands and products have been an important part of the commercial market place and we are pleased that these products will continue to be available for health clubs and fitness centers for the future. We are confident that Fit Dragon will be an excellent supplier to the commercial markets, and we will work aggressively with them to support an effective transition of our StairMaster and Schwinn indoor cycling commercial products and service.
“We are retaining certain rights of the Schwinn trademarks and remain committed to the Schwinn brand and fitness products in the consumer channel and will continue our marketing, product development and sales efforts in these channels,” Bramson said.
Under the terms of the agreements, the assets are being sold for $12.3 million. The company will receive a net cash payment of $10.9 million and approximately $1.4 million in liabilities are being assumed by the buyer. Nautilus will receive approximately $7.9 million cash at closing, $2 million within 60 days, and the remaining $1 million over the next three years. In addition, Nautilus will be entitled to receive certain royalties based on the buyer’s post-closing sales of Schwinn commercial indoor cycling and StairMaster products. Nautilus will retain the right to continue to market and sell Schwinn indoor cycling products in the retail and direct to consumer sales channels. Nautilus will also retain certain rights to sell StairMaster products in the retail and direct to consumer markets.
Nautilus continues to work with Robert W. Baird & Co. to divest its remaining commercial assets, including the strength and cardio lines and the manufacturing plant in Virginia.
With the disposition of these commercial businesses, Nautilus plans to focus exclusively on the consumer marketplace. As part of that effort, Bill McMahon has been promoted to senior vice president and general manager for the entire consumer business reporting directly to Edward Bramson, CEO of Nautilus. In addition, the company announced that Sebastien Goulet, general manager commercial business and senior vice president manufacturing, has elected to leave the company to pursue other opportunities.