Google buys Fitbit for $2.1bn in challenge to Apple’s wearables business
Acquisition is Google’s largest since 2014 purchase of Nest
Google has struck a $2.1bn deal to buy fitness-tracking pioneer Fitbit, as the two Silicon Valley companies team up to take on Apple’s fast-growing wearable-tech business.
Fitbit is Google’s biggest acquisition in consumer electronics since it paid $3.2bn for smart home company Nest in 2014.
While Google’s offer represents a 19 per cent premium to Fitbit’s closing price on Thursday, it prices Fitbit at little more than half of the $4bn valuation at which it went public four years ago.
The deal, which is conditional on shareholder and regulatory approval, will test Fitbit customers’ willingness to hand over their health and fitness data to Google. The two companies on Friday promised that Fitbit users’ data “will not be used for Google ads”.
“Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users,” said Rick Osterloh, Senior Vice President, Devices & Services at Google. “We’re looking forward to working with the incredible talent at Fitbit, and bringing together the best hardware, software and AI, to build wearables to help even more people around the world.”
James Park, co-founder and chief executive of Fitbit, said Google was an “ideal partner” “With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster, and make health even more accessible to everyone,” he said.
Fitbit shares surged by 30 per cent on Monday after news of a possible deal was reported, reversing the more than 10 per cent year-to-date drop in the San Francisco-based company’s shares prior to the announcement.
Google’s offer of $7.35 per share for Fitbit compares with its $20 initial public offering price in June 2015. After closing at a high of $47.49 soon after the IPO, Fitbit’s shares have languished over the past two years as it attempted to refocus its business away from low-cost fitness trackers towards smartwatches, as it faced intensifying competition from Apple’s Watch.
Fitbit shares had surged by 30 per cent on Monday after news of a possible deal was initially reported, reversing the more than 10 per cent year-to-date drop in the wearable company’s shares prior to the announcement.
In July, Fitbit saw its shares lose a firth of their value after weak sales of its Versa Lite smartwatch, forecasting wider losses this year than investors had anticipated.
Apple, meanwhile, reported strong sales of its wearable devices earlier this week, with revenues for the latest quarter jumping 54 per cent year on year to $6.5bn.
The deal, if approved, is expected to close next year. Qatalyst and Fenwick & West advised Fitbit on the transaction.