Forest Road Acquisition Corp (FRX) to Combine with Beachbody and Myx Fitness in $2.9Bn Deal
by Nicholas Alan Clayton on 2021-02-10 at 9:34am

Forest Road (NYSE:FRX) has entered into a definitive agreement to combine with the consumer fitness firms the Beachbody Company and Myx Fitness Holdings for an enterprise value of $2.9 billion, or 2x its 2022E revenue.

Santa Monica, California-based Beachbody provides nutritional supplements and on-demand workout media content, while Myx Fitness provides fitness bikes connected to digital readouts and classes.

The combined company is expected to trade on the NYSE under the symbol “BODY” following the deal’s close expected in the second quarter of 2021.

Transaction Overview

Forest Road brings about $300 from its current trust into the deal alongside a $225 million PIPE. This drew institutional investment from Fidelity Management & Research Company and Fertitta Capita among others.

Beachbody’s existing shareholders are expected to own about 84% of the combined entity, with Beachbody CEO Carl Daikeler taking 41.1% and the company’s president, Jon Congdon, holding 6.6%. Other existing company shareholders are to hold about 35.8% of the group. Forest Road shareholders are to take 8.8%, with PIPE investors taking 6.6%.

Forest Road’s sponsor is expected to own 1.1% of the combined entity with half of its founder shares subject to a five-stage earnout. This portion of shares vests in 10% tranches once the combined shares trade at $12, $13, $14, $15, and $16 for 20 of 30 trading days starting 180 days out from close for 10 years.

Beachbody will continue to be led by its existing management team, with Forest Road strategic advisor Kevin Mayer set to join the combined entity’s Board.

Quick Takes: Beachbody has kept up with the transition of fitness from a business model of static gyms to that of online influencing and subscription workouts-as-a-service. But, the company is also emerging from a downswing and the deal is betting big on the comeback.

Beachbody’s adjusted EBITDA fell 68% to $32 million in 2020, and is expected to slump a further 93% to negative $30 million in 2021E.

The company explains this was due to increased customer acquisition costs (CAC), and, to its credit, top line revenue was undented. Beachbody maintained top line growth, increasing revenues by 14% in 2020.

But the years of past financials 2018-2020 to do not match the explosive growth at a CAGR of 30% the company expects through 2025E.

The bulk of this projected growth relies on digital subscription revenue to more than triple during this time, but that is the same customer growth that it has found to be expensive in CAC terms. It also counts on revenue from nutritional products to more than double from $526 million in 2020E to $1.2 billion in 2025E.

The most intriguing part of the deal is the group’s tuck-in of Myx Fitness which offers a connected exercise equipment platform similar to Peloton (NASDAQ:PTON).

Myx’s bike comes at a lower cost at $1,299 per bike and a $29 per month subscription than Peloton. Category-creating Peloton offers its cheapest bike package at $1,895 and $39 per month for any subscription that provides more than real-time bike stats and three classes.

If anyone is going to undercut Peloton, Beachbody may have the platform to do it, with enough existing customer base heft to cross-sell users onto and back off of the bike. It expects its connected fitness revenue to be $97 million in 2021 and grow to $581 million in 2025E.

That platform could be the key to unlocking value in the combined group’s other business divisions. It has already built up a large library of workout videos, which tend to be more evergreen than other forms of media. It has also attracted powerful influencers like LeBron James and Arnold Schwarzenegger to its platform, and so the company has a shot at taking Peloton’s trophy.

The transaction values Beachbody at about 3x its 2020 revenue or 2x its 2022E projections. Either measure is competitive with its peers, as Peloton trades at 7.9x and subscription brands like Netflix (NASDAQ:NFLX) trade at 7.9x to 3.7x their next year’s projected revenue.

Meanwhile, fellow workout stock Planet Fitness (NYSE:PLNT) trades at 12.2x 2022E revenue and consumer wellness brands like Chewy (NYSE:CHWY), Simply Good (NASDAQ:SMPL) and Bellring (NYSE:BRBR) all trade at just over 3x this mark.

Click here for the full investor presentation.


  • The Raine Group LLC (“Raine”) acted as exclusive financial advisor to Beachbody
  • Credit Suisse (USA) LLC (“Credit Suisse”) is acting as lead capital markets advisor to Beachbody
  • BofA Securities, Inc. is acting as an additional capital markets advisor to Beachbody
  • Latham & Watkins LLP and Cozen O’Connor C.P. are acting as legal advisors to Beachbody
  • Credit Suisse is acting as lead placement agent and Raine and Cantor Fitzgerald & Co are acting as placement agents on the private placement
  • Guggenheim Securities, LLC is acting as lead financial and capital markets advisor to Forest Road
  • Greenhill & Co, LLC is also acting as financial advisor to Forest Road
  • Robert W. Baird & Co. Incorporated is acting as an additional capital markets advisor to Forest Road
  • Kirkland & Ellis LLP and Ellenoff Grossman & Schole LLP are acting as legal advisors to Forest Road
  • Greenberg Traurig, LLP is acting as legal advisor to Myx Fitness


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