Benzinga | Feb 10, 2021 06:08AM EST

The Beachbody Company To Go Public Through Merger With Forest Road Acquisition Corp.; Transaction Values Combined Co. At $2.9B

The Beachbody Company, Forest Road Acquisition Corp. and Myx Fitness Enter Three-Way Merger

The Transaction Values the Combined Company at $2.9 Billion and is Expected to Add Over $420 Million of Cash to the Balance Sheet, Including a Committed PIPE of $225 Million, Led by Institutional Investors Including Fidelity Management & Research Company LLC and Fertitta Capital

With This Transaction, Beachbody Will Be Poised to Scale its Growing Platform of Over 2.6 Million Paid Digital Subscribers into the Connected Fitness Space While Also Accelerating International Expansion, Enhanced Innovation and Opportunistic M&A

The Beachbody Company Group, LLC ("The Beachbody Company," "Beachbody" or "the Company") announced today its intention to become a public company by entering into a definitive three-way merger agreement with Forest Road Acquisition Corp. (NYSE:FRX) ("Forest Road"), a publicly traded special purpose acquisition company, and Myx Fitness Holdings, LLC ("Myx Fitness" or "Myx"), an at-home connected fitness platform featuring an industry leading bike and home studio.

Upon closing of the business combination transaction, The Beachbody Company will be the parent company of three premium content and technology-driven businesses: Beachbody On Demand (BOD), Openfit and Myx. The transaction is expected to close in the second quarter of 2021 and the combined company will be listed on the NYSE under a new ticker symbol, "BODY".

Beachbody will continue to be led by Carl Daikeler, Beachbody's co-founder, Chairman and Chief Executive Officer and Jon Congdon, co-founder of Beachbody and CEO of Openfit. Forest Road's strategic advisor Kevin Mayer, former CEO of TikTok and visionary leader behind Disney+, will join the combined company's Board of Directors. Beachbody management and shareholders are rolling over 100% of their equity stake and will own approximately 84% of the pro forma business at close.

Combined Company Overview

As a leader in digital fitness streaming and nutrition solutions, Beachbody is well-positioned to capitalize on the increased demand for at-home health and wellness offerings and will further invest to drive accelerated customer acquisition, expand internationally and pursue attractive, high-return M&A opportunities.

With brands such as P90X(r), INSANITY(r) and 21 Day Fix(r), 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. Through the BOD and Openfit platforms, the Company has developed a diverse offering of live and on-demand content as well as nutrition solutions that reach a passionate and loyal community, including more than 2.6 million paid digital subscribers.

With the addition of Myx, the Company's portfolio will expand to include a connected fitness offering that provides a holistic and innovative on and off-bike solution with workouts that are personalized based on machine learning and heart rate data. With an attractive price point of $1,299, Myx sold over 27,000 bikes in its first year of operation, and has a highly engaged customer base of users who complete an average of 15 workouts each month. In addition, the merger with Myx will further leverage the scale of The Beachbody Company's platform as it unlocks synergies across distribution, marketing and content creation for all three of its brands.

"We are excited to partner with Forest Road and Myx Fitness, and are humbled by the proven team of executives and industry icons who have stepped forward to support our shared vision," said Mr. Daikeler. "We have seen incredible digital growth in recent years, which was further fueled in 2020 by a structural and lasting shift in how people embrace health and fitness. With the acquisition of Myx, cutting edge technology meets best-in-class streaming content -- and we will continue to redefine the at-home fitness experience as we pair the integrated hardware, science-based heart rate coaching and personalized smart recommendations behind Myx with Beachbody and Openfit's best-in-class content libraries, track record of content innovation and vast network."

Mr. Mayer commented: "Beachbody's rapid subscriber growth is grounded in the concept of community and accountability with a mission-driven focus that capitalizes on the huge growth in the health and wellness space. The Company's engagement and retention metrics validate the quality and depth of its content library and direct-to-consumer (DTC) technology capabilities. I see many parallels at Beachbody with the work we did at Disney, where we aggressively accelerated our digital transformation and leveraged our content to build Disney+, ESPN+ and Hulu. In addition to its significant organic growth potential, the scale and differentiation of Beachbody's platform will allow us to pursue attractive M&A opportunities in this highly fragmented ecosystem, which will enable us to increase our market share globally and diversify our product offering. I'm excited to join the board to help further fuel growth and value creation for the company and its shareholders."

"When we raised our SPAC, we were determined to find a company with a strong, proven business model and significant growth potential where we could add value from our experience in the creation and monetization of premium content. Beachbody is a perfect fit with those objectives," said Tom Staggs, former COO & CFO of Disney and Forest Road board member and strategic advisory committee chair. "We are fortunate to have identified a business poised to benefit from three powerful market trends: digital subscriptions, connected fitness and growing consumer demand for health and wellness. These trends give us even more confidence that we have found an extremely attractive investment for our shareholders. Beachbody has always leveraged its fitness content to acquire customers profitably and with the proceeds of this transaction, Carl and his team at Beachbody can invest to significantly accelerate customer acquisition and financial growth for years to come."

Combined Company Highlights

* A diverse portfolio that appeals to a broad consumer base through a holistic approach that brings together at-home, digitally enabled fitness, nutrition and community

* Generated 2020 pro forma revenue of $880 million across BOD, Openfit and Myx, which achieved $30 million of revenue in its first year of operations

* 2.6 million paid digital fitness subscribers with 96% month over month retention

* Industry-leading 89% gross margins on digital subscription revenue across all three brands

* The deepest library of premium fitness content in the industry that generates more than 180 million views annually

* A premium portfolio of branded nutrition products that are scientifically developed, clinically tested and strategically paired with fitness content for a holistic health and wellness experience

* Scalable platform that enables synergies across distribution, marketing and content creation

* Management team with over 22 years of experience creating content, acquiring customers and delivering substantial revenue and EBITDA

* Well-positioned to unlock accelerated growth and expects to achieve compound annual revenue growth of 30% over the next 5 years

Transaction Overview

In addition to the approximately $300 million held in Forest Road's trust account (assuming no redemptions), institutional investors, including Fidelity Management & Research Company LLC and Fertitta Capital, have committed to a private placement ("PIPE") of $225 million to purchase shares of Class A common stock of the combined company that will close concurrently with the business combination.

The transaction implies a pro forma enterprise value for Beachbody of approximately $2.9 billion, or 2.0x 2022 estimated revenue. It is anticipated that the combined company will have over $420 million of unrestricted cash on the balance sheet, assuming no redemptions from the trust account, to fund its future growth plans.

The Board of Directors of Forest Road, and the Board of Managers of each of Beachbody and Myx have unanimously approved the transaction, and holders representing a majority of Beachbody equity interests and a majority of Myx equity interests have signed voting and support agreements agreeing to vote for the transaction. In addition to Beachbody and Myx equity holder approvals, the transaction will require the approval of the stockholders of Forest Road, and is subject to other customary closing conditions, including the receipt of certain regulatory approvals.

Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission and will be available at www.sec.gov.