Google to acquire Fitbit, valuing the smartwatch maker at about $2.1 billion

#Google #Alphabet #Fitbit #Fitnesstracker 

Google parent company Alphabet will buy Fitbit, according to an announcement Friday, putting the tech giant head-to-head with Apple in the fitness tracking space. The deal values Fitbit around $2.1 billion at a fully diluted equity value, according to the release.

On Monday, Fitbit's stock surged more than 30% on news that Alphabet had made an offer to acquire the smartwatch maker. As of Monday's close, Fitbit's market cap sat at $1.5 billion, up $340 million from the previous trading day.

As of the end of 2018, Apple owned about half of the global smartwatch market in 2018 in terms of units shipped, according to Strategy Analytics. Google currently licenses its Wear operating system to companies such as Fossil but does not make its own smartwatch. 

Following the announcement, Google's hardware chief Rick Osterloh released a blog post explaining how the acquisition can help Google advance its ambitions for Wear OS.

"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," Osterloh said in the post. "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."

Buying Fitbit could help Google extend its "ambient computing" hardware strategy, where the company aims to be a part of users' lives wherever they are. The company has hinted at its health and hardware ambitions with the introduction of several new products in October, including the new Pixel 4 smartphone, and the hire of former Geisinger Health CEO David Feinberg last year to consolidate its health-care strategy.

Fitbit has suffered headwinds as Apple's popular smartwatch grows. Fitbit lowered its guidance for the year in its July earnings release, citing weaker-than-expected sales of its new lightweight watch.

By Lauren Feinercnbc.com