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Google Gets in Shape With Fitbit Acquisition

Wearable device company Fitbit Inc. (NYSE:FIT) announced on Friday it is being acquired by Alphabet Inc.'s (NASDAQ:GOOG)(NASDAQ:GOOGL) Google for approximately $2.1 billion.

According to the terms of the all-cash deal, the Mountain View, California-based parent company of Google, YouTube and LinkedIn will pay $7.35 per share for the San Francisco-based manufacturer of fitness tracking devices.

In a blog post published after the announcement was made, Rick Osterloh, Google's senior vice president of devices and services, outlined how the acquisition will help the company compete in the smartwatch and fitness tracking space as it does not currently produce its own device.

"Fitbit has been a true pioneer in the industry and has created engaging products, experiences and a vibrant community of users," he wrote. "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."

Buying Fitbit will also help Google make progress in improving its Wear OS software, which it licenses to other companies like Fossil (NASDAQ:FOSL).

"Google also remains committed to Wear OS and our ecosystem partners, and we plan to work closely with Fitbit to combine the best of our respective smartwatch and fitness tracker platforms," Osterloh said.

For its part, Fitbit stands to benefit from the deal as well. The company, which has struggled to compete in the space as Apple's (NASDAQ:AAPL) smartwatch has gained popularity, lowered its guidance for the year in July after recording lower-than-expected sales of its new lightweight watch in the second quarter.

In a statement, Fitbit Co-Founder and CEO James Park said he was "extremely proud" of the progress the company has made in its goal of making "everyone in the world healthier."

"Google is an ideal partner to advance our mission," he said. "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."

Upon approval, the deal is expected to close in 2020.

Following the announcement, shares of Fitbit soared 15.37% to $7.13. Alphabet's Class C shares were up 0.31% at $1,264.40 on Friday morning.

GuruFocus estimates both stocks have gained approximately 20% year to date.


Guru shareholders of Fitbit who stand to benefit from the deal include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Philippe Laffont (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).

Disclosure: No positions.

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This article first appeared on GuruFocus.