Michael Bruno, owner and president of manufacturer Land America, has acquired a controlling interest in Star Trac Fitness’ parent company in a deal that promises to let the 35-year-old company continue to run separately.
The agreement, which culminated after Star Trac started talking to investors three months ago, brings an infusion of much-needed cash to the strapped fitness manufacturer. Based in Southern California, Star Trac (www.startrac.com) had begun to pare back and re-shape management in the last few months. (Click here to see a June 10, 2010, SNEWS® story, “Star Trac restructures, seeks new capital after president’s resignation, huge layoffs.”)
The deal, which was announced to employees on July 6 at 3 p.m. PST, is expected to close by July 9, Star Trac announced. Bruno’s Land America company is one of several manufacturers making equipment for Star Trac for the past several years.
“It’s a normal evolution to strengthen the relationship,” C. Reed Brown, general counsel for Bruno’s companies, including Land America, told SNEWS®. “It’s just a very happy marriage – a short courtship and a very happy marriage.”
Financial details were not disclosed.
Bruno founded Land America, a China-based manufacturer for several brands, in 1992. Most recently, Land America (www.laxiamen.com) acquired in December 2009 the StairMaster brand and its assets and the license to the Schwinn indoor cycling business from Nautilus. Land America has also been manufacturing product for Nautilus for a number of years. The Nautilus deal was part of Nautilus’ strategy to regain strength and financial efficiency and validity by trimming away all of its commercial fitness interests. (Click here to see a Dec. 18, 2009, SNEWS® story, “Fit Dragon unveiled as Land America taking over Nautilus commercial as Core Fitness.”)
Star Trac was founded in 1975 by James Sweeney, and for years was reputed solely as a manufacturer of quality treadmills. In its early days it was known as Unisen, short for its original name of Unique Sensors, and had contracts to manufacture others’ equipment, including the early LifeCycle. By the early ‘80s it came out with its own first piece, a treadmill, and by 1988 the first batch of Star Trac 2000 treadmills was delivered internationally. Its name morphed into Star Trac by Unisen until “Unisen” was dropped for the name Star Trac. James Doody, the majority owner until this deal with Bruno, became an investor in Star Trac in 1977. According to Brown, Doody will retain a small interest in Star Trac.
“Over the last 20 years Star Trac has grown from very small beginnings to a leader in the fitness industry, but this has stretched its resources,” Doody told SNEWS. “When the financial crisis hit it was a big strain on the company, and I am very pleased that we have been able to bring in Michael Bruno to help stabilize the company.”
Seven years ago, aggressive growth began under the leadership of Steve Nero as COO who later also took on the title of president. Nero and Star Trac parted ways May 27, 2010, followed the next week by significant layoffs of top executives and other staff globally. In addition, Star Trac’s consumer division reps are to leave the company as of July 31. The consumer division, currently Colorado-based and under the leadership of Kevin Lamar until July 31, will fold into the California headquarters. Mike Leveque took over as COO and president, and Star Trac has since promoted Matthew Pengelly to managing director of Europe, the position Leveque left.
Recently, the company’s customers had complained to SNEWS of unavailable parts or equipment, long-delayed orders and deficient customer service.
“This capital infusion allows us to recover from our current challenges and get back to building the company,” Randy Bergstedt, Star Trac vice president of marketing, said. “The stability allows us to get back to what we can do best – customer service and innovative products.”
Indeed, the intent of the deal is to be transparent and to allow Star Trac to continue on its own but with additional resources, spokespersons for both companies told SNEWS.
“Our activities will create the foundation for the company to experience strong growth and profitability,” Bruno said in a statement. “This reorganization provides the resources for a strong balance sheet and positions Star Trac for long-term success.”
Doody added that the deal should allow the brand and equipment to continue strongly.
“With this investment the company is on firm financial footing,” Doody said, “and (it) can capitalize on its foundation to truly achieve its potential.”