Peloton founder sells $50mn in inventory to MSD Companions

Peloton co-founder John Foley has bought about $50mn of inventory to MSD Companions, in his largest stake sale coming simply weeks after he stepped down because the related health firm’s chief government.

Foley stepped again early final month after Peloton misplaced greater than 80 per cent of its market worth in roughly a yr. Peloton employed Barry McCarthy, a veteran of Netflix and Spotify, to take over as chief government, whereas Foley grew to become government chair.

The acquisition of 1.9mn shares straight from Foley is the primary funding in Peloton by MSD Companions, which manages $20bn in belongings on behalf of Michael Dell, the founding father of Dell Applied sciences, and different outdoors traders.

“Peloton is an distinctive model and MSD Companions is happy to have this chance to again Barry McCarthy and the Peloton crew as they place the enterprise for long-term progress,” Gregg Lemkau, chief government of MSD Companions, advised the Monetary Instances in a press release. 

Foley bought the shares at $26 a bit, a worth far under its share worth peak of greater than $162 in late December 2020, in response to a regulatory submitting revealed Wednesday by the Securities and Trade Fee. The sale marks the primary time Foley has bought shares under $29, the worth at which it went public in September 2019.

“This choice to train some inventory choices and promote these underlying shares in a personal sale to MSD Companions, was John’s choice, based mostly on his personal monetary planning,” Peloton advised the FT.

A number of prime Peloton executives had borrowed in opposition to their shares final yr to money in on its inventory worth acquire with out incurring a steep tax invoice. When Peloton shares slipped 40 per cent in November, some confronted margin calls. Peloton declined to touch upon the rationale for Foley’s sale.

Foley had pledged 3.5mn of his shares as collateral with a financial institution for private loans, in response to an October proxy assertion.

Earlier than he stepped apart as chief government, Foley’s administration of the corporate drew criticism from Blackwells, an activist investor, which accused him of “unbridled optimism” that led to uncontrolled prices and bloated inventories. 

Blackwells additionally famous that Foley has bought almost $100mn of shares in 2021, which they dubbed “extreme,” including that pledging shares can “result in compelled inventory gross sales . . . and speed up a downward spiral within the inventory worth.”

Peloton shares rallied by greater than 50 per cent in early February because the FT and others reported that corporations together with Amazon and Nike have been tentatively evaluating a doable bid for the corporate. However the inventory has given up most of these positive factors since McCarthy advised the FT that he had not joined the corporate with the intention of promoting it. 

*This story has been amended since preliminary publication to appropriate the outline of MSD Companions.