Interactive Strength (TRNR) announced that the company has signed a non-binding letter of intent and exclusivity agreement to acquire a connected-fitness equipment company. The proposed transaction is expected to close as early as the first quarter of 2025 and be accretive to TRNR’s financial results. The company said, “We are extremely excited by today’s news that we’ve signed a non-binding letter of intent and exclusivity agreement to potentially acquire our first scaled, and profitable, health & wellness business. The possible acquisition is transformative, and we expect it to provide us the necessary scale to achieve profitability in 2025. The target’s current shareholders aren’t taking any chips off the table, choosing to become and remain long-term shareholders of TRNR. This underscores the value both parties see in the combined business. We’ll be sharing increasing amounts of detail on this latest acquisition target as we move towards closing on the potential deal. For now, shareholders should focus on the following: WHY WE ARE PURSUING OUR SECOND ACQUISITION IN A YEAR: The target company fits with our strategy of using our public listing to make accretive acquisitions of profitable and high-growth businesses in the highly-fragmented health & wellness market globally. The target company is still founder-led, has been in business for more than a decade and has never raised external capital. The target is now ready for the next phase of growth, which TRNR is well-positioned to accelerate given our public listing and distribution. At more than $40 million in annual revenues, and profitable, the potential acquisition would drive a step-change for both the top and bottom lines of TRNR. The valuation being paid is primarily based on future multi-year performance of the target, which protects the TRNR shareholders and should ensure an attractive earnings multiple. There is no cash consideration expected to be paid to the shareholders of the target, and they are exchanging all of their equity to become long-term shareholders in the combined company. It is expected that the acquisition can close without a capital raise or financing contingency. The target company complements TRNR’s existing brand and product footprint extremely well, expanding and differentiating the assortment of equipment and training options we can offer both businesses and consumers globally. WHY THIS GROWTH STRATEGY MAKES SENSE: The global health & wellness market is massive but fragmented – and constantly evolving for both consumers and businesses. This large market size and strong growth is expected to be a constant tailwind for TRNR as it is clear an increasing number of consumers are seeking to address health and longevity and we expect to be exposed to many different facets of the wellness market. This is why TRNR’s goal is to assemble a collection of opportunities for investors to capture the benefit of the underlying trends while meditating against downside risks via a portfolio approach. This includes both B2B and DTC sales channels. Consumers will continue to spend on health and wellness, but companies are equally expected to continue to represent a key purchasing pool. This also includes a broader definition of fitness/wellness. As the number of offerings increases, buyers and investors alike benefit from TRNR’s differentiated assortment. More specifically, TRNR intends to intercept subscale, high-potential businesses before their multiples expand. It is estimated that there are more than 400 Gym & Exercise equipment manufacturers in the US alone. According to the FDA, there are roughly 4,000 brands selling into the supplement space. Even in newly-popular, hyper-specific categories there are multiple companies: there are at least a dozen infrared sauna brands available in the US, and the “cold plunge tub” category already has its own US market studies. The clear takeaway: in the US alone, there are a huge number of companies, spread a huge number of health and fitness categories – the majority of which, by definition, are subscale – available for an informed buyer to consider for possible acquisition. In summary, both the completed CLMBR acquisition and the potential acquisition related to today’s Letter of Intent reflect our belief that we will be able to increase shareholder value via strategic transactions, through a combination of operational knowledge and a highly aligned incentive structure between target business owners and TRNR shareholders.”