Google Acquiring Fitbit for $2.1 Billion

The acquisition will place Google in a more prominent spot in the wearable fitness space.

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Google-Acquiring-Fitbit-for-$2.1-Billion

Google’s parent company, Alphabet, is reportedly acquiring Fitbit. Google is purchasing Fitbit for $7.35 per share in cash, or approximately $2.1 billion. Fitbit’s highest share price has previously been as high as $51.90 during August 2015. Some experts say that Google’s acquisition comes at a diluted cost. The acquisition is expected to close sometime next year.

The acquisition will place Google in competition against other tech giants in the wearable fitness tracking space, including Apple.

Once news of the acquisition broke, Fitbit’s stock surged ahead at 16 percent. The company’s stock had risen even higher on Monday up to 30 percent on rumors that Alphabet had made an offer to Fitbit. This sent stock trading at $340 million more from the previous day. Alphabet’s shares went up by 0.8 percent on news of the acquisition.

Rick Osterloh, Google’s hardware chief, released a statement after the announcement detailed how the sale will help Google’s ambitions concerning Wear OS, its smartwatch software.

“By working closely with Fitbit’s team of experts, and bringing together the best AI, software, and hardware, we can help spur innovation in wearables and build products to benefit even more people around the world,” said Osterloh.

The announcement also maintained that Google would not use wellness and health data from Fitbit in its ads. One of the leaders involved in the antitrust probe, Rep. David Cicilline of Rhode Island, is skeptical. Cicilline fears the acquisition will offer insights into sensitive information about Americans.

“This proposed transaction is a major test of antitrust enforcers’ will and ability to enforce the law and halt anti-competitive concentrations of economic power,” Cicilline said. “It deserves an immediate and thorough investigation.”

Google’s latest move comes after the multinational technology company announced a $40 million deal in January to buy Fossil’s smartwatch technology. The acquisition of Fitbit may help Google expand on its ambient computing hardware strategy. Some say this will enable Google to be at the center of its users’ lives.

Google has also alluded to more hardware and health ambitions. The company plans to introduce many new products, including the Pixel 4 smartphone. Google also hired Geisinger Health’s former CEO, David Feinberg, to help consolidate its health strategy.

Fitbit recently lowered its expectations for the year during its July earnings release. The company had weaker-than-expected sales of its lightweight watch.

By the end of 2018, Apple had a controlling interest in nearly 50 percent of the global smartwatch market. While Google licenses its operating system to other smartwatch companies, it doesn’t manufacture its own smartwatch.

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