As Google looks to take on Apple and Samsung in the market for wearable devices, the Alphabet-owned search engine is buying fitness tracker pioneer Fitbit for US$2.1bn.
Google says that it sees an opportunity to introduce “Made by Google” wearable devices into the market. It had announced a deal to buy Fossil Group’s intellectual property related to smartwatch technology earlier this year.
Craig Hallum analysts wrote in a note: “We believe Google is a natural fit. The deep health and fitness data, coupled with the 28 million active users on the Fitbit platform, offer a tremendous value.”
Xiaomi dominates the wearables market, with a 17.3% market share in the second quarter of 2019, followed by Apple. Fitbit owns 10% of the market, according to data from International Data Corp.
Fitbit has been offered US$7.35 per share in cash, a premium of about 19% to the stock’s closing price on 31 October. The company’s shares were trading at US$7.15.
Fitbit also says health and wellness data of its users would not be used for Google ads. Google said it would give Fitbit users the choice to review, move or delete their data..
Qatalyst Partners was financial adviser to Fitbit on the deal, which is expected to close in 2020. Fenwick & West was the legal adviser.