Yahoo Finance Google snaps up Fitbit for $2.1bn
Google has snapped up the Fitbit fitness tracker business in a $2.1bn (£1.6bn) deal that will enable the search giant to go toe-to-toe with Apple in the fast-growing smartwatch and wearables business.
Google is paying cash for the San Francisco-based Fitbit, which was set up in 2007.
It is paying $7.35 per share – a premium of more than 70% to the Fitbit share price before the shares were suspended earlier this week amid takeover speculation.
The price, however, is a fraction of the company’s value when it floated in 2015. The shares were initially priced at $20, and soared to more than $50 in the weeks following the initial public offer. But it has suffered in recent years from competition from bigger rivals Apple, Samsung and China’s Xiaomi.
The deal, which is Google’s biggest consumer purchase since it bought home-tech business Nest five years ago for $3bn, will have to be approved by shareholders and regulators, especially over how it handles Fitbit users’ data. Its fitness trackers store physical health data for users who track their activity and exercising using a range of wearable devices
Fitbit said it would not sell customers’ personal data and that wellness data would not be used by Google ads.
Google has offered its own fitness tracking service, called Google Fit, since 2014, but has relied on third parties such as Fossil to produce Android-compatible smartwatches.
The deal will expand Google’s range of consumer products, which already includes smartphones, headphones, smart speakers and laptops.
Earlier this week, amid reports that the deal was being finalised,the British Labour party wrote to the UK’s competition regulator calling for the takeover to be blocked. Tom Watson, the shadow digital, culture, media and sport secretary, called the deal a “data grab”.
Fitbit insisted its users’ data would be safe in the hands of its new owner. In a statement it said: “Consumer trust is paramount to Fitbit. Strong privacy and security guidelines have been part of Fitbit’s DNA since day one, and this will not change. Fitbit will continue to put users in control of their data and will remain transparent about the data it collects and why.”
The deal is expected to be completed in 2020, but still needs approval from shareholders and regulators.
Fitbit co-founder and CEO, James Park, said: “Google is an ideal partner to advance our mission. 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. I could not be more excited for what lies ahead.”
