Google’s parent company, Alphabet, will acquire Fitbit, according to an announcement on Friday, putting the tech giant in direct competition with Apple in fitness tracking. According to the press release, Fitbit is valued at about $2.1 billion overall.
Fitbit’s shares rose 16% on the stock market before the sale of shares and their suspension earlier that morning. Alphabet’s shares increased by about 0.3%.
Google will pay $7.35 per share in cash for the acquisition. Fitbit’s record stock price was $51.90 on August 5, 2015, a few months after its market debut at $30.40. The deal is expected to be finalized in 2020, according to the announcement.
On Monday, Fitbit’s stock had jumped more than 30% after Alphabet announced its offer to buy the smartwatch maker. At Monday’s close, Fitbit’s market capitalization stood at $1.5 billion, up $340 million from the previous trading day.
Following the announcement, Rick Osterloh, Google’s head of hardware, published a post on the blog explaining how this acquisition can help Google advance its ambitions for Wear OS, its software for smartwatches.
“By working closely with the Fitbit team of experts and bringing together the best of artificial intelligence and software, we can help spur innovation in wearables and design products that will benefit even more people around the world,” Osterloh said. “Google also remains committed to Wear OS and its ecosystem partners, and we plan to work closely with Fitbit to combine the best of our respective smartwatch and fitness tracking platforms.”
Fitbit’s purchase could help Google expand its hardware strategy of “ambient computing,” which aims to be part of users’ lives wherever they are. The company hinted at its health and hardware ambitions with the launch of several new products in October, including the new Pixel 4 smartphone, and the hiring of former Geisinger Health CEO David Feinberg last year to strengthen its healthcare strategy.
Fitbit has faced headwinds as Apple’s smartwatch grows. Fitbit lowered its full-year outlook in the release of its July results, citing weaker-than-expected sales of its new lightweight watch.
By the end of 2018, Apple held about half of the global smartwatch market in 2018 in terms of units shipped, according to Strategy Analytics. Currently, Google licenses its Wear operating system to companies such as Fossil, but does not make its own smartwatch.
