In a bid to make it's presence felt in the wearable segment search giant Google is buying Fitbit for $2.1 billion. With the move, Google is also expanding its reach beyond search and strengthening its position more into the hardware game. Although Fitbit is considered a pioneer in wearable technology, of late, it is struggling against rivals including Apple.
Fitbit's market capitalisation soared to just under $10 billion after becoming a public company in 2015. Its value this week is well below $2 billion. However, Fitbit shares surged nearly 30 per cent earlier this week following reports about a potential buyout by Google. The stock jumped another 17% at the opening bell Friday.
According to IDC research for Q2 2019, Fitbit was in fourth place following Xiaomi, Apple and Huawei leading at top three positions respectively.
Google parent Alphabet said it will pay $7.35 per share for the company, which were trading at $7.20 each after the deal was announced.
Fitbit has 28 million active users worldwide and has sold more than 100 million devices. No changes to its privacy and security guidelines will take place whatsoever and Fitbit said that it will continue to be transparent about its data collection practices.
Of late, Google has been boosting its hardware offerings, including a line of Pixel smartphones and tablets, in addition to connected Nest speakers and routers.
"We have built a trusted brand that supports more than 28 million active users around the globe who rely on our products to live a healthier, more active life," Fitbit co-founder and chief executive James Park said in a statement by the two firms announcing the deal.
"Google is an ideal partner to advance our mission. 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." Rick Osterloh, Google senior vice president for devices and services, said the deal for the wearable tech pioneer is one "bringing together the best hardware, software and AI, to build wearables to help even more people around the world." While Fitbit was among the first to popularize fitness bands, it has lost ground in recent years to rivals.
If approved by regulators and Fitbit shareholders, the deal is expected to close sometime next year.
(With agency inputs)