Four days after the rumors surfaced that Google was in talks to acquire Fitbit Inc., the agreement is now official, possibly setting up a battle royale for the later era of smartphone-connected devices.
The search giant said today that agreed to pay $ 7.35 per Fitbit share in a cash transaction worth $ 2.1 billion. LThe offer represents a premium of 70% to the smartwatch maker's closing price on Friday, the last trading day before the purchase discussions were made public.
Still, the $ 7.35 per share that Google is paying represents a small fraction from the all-time high of $ 51.90 the company reached in 2015. Fitbit's share price and market share have taken a hit in recent years due to intense competition from Apple, which leads the smartwatch market by a wide margin with your Apple Watch.
The Google acquisition could mean more competition for the iPhone maker. Investment bank Cowen & Co wrote in a research note to clients that
"The Fitbit platform can be expanded with Google technology under new ownership and that Fitbit technology can be integrated into existing Wear OS devices." Wear OS is the stripped-down version of Android offered by the search giant for wearables.
Another technology that could make its way to Fitbit devices is the Google Assistant. Given that the smartwatch maker's Versa 2 model offers Alexa integration, it's not hard to imagine that the Alphabet Inc. subsidiary also wants to make its own service available to users. Doing so would expand the reach of the Google Assistant to millions of new devices.
Fitbit's strong brand awareness also has value Cowen noted that the deal will benefit Google al
"To provide the company with a hardware brand that has significant standing in the fitness tracker space, something that has arguably been lacking in the Wear OS community."
Google's acquisition of Nest in 2014 may provide additional clues about the search giant's plans. After acquiring Nest, it significantly expanded its smart home product line by adding Internet-connected security cameras, an alarm, a smart doorbell, and more.
Google could similarly capitalize on Fitbit's brand and extend its product portfolio beyond smart watches to other categories of wearable devices.
Google it could even integrate the two product families with each other. The Apple Watch allows users to control certain third-party smart locks with an app, a feature that Google can now replicate with Fitbit watches and the Nest doorbell.
Rick Osterloh, head of Google's hardware business, promised in a blog post that consumer data collected by Fitbit devices will not be used for ad serving.
And Fitbit co-founder and president James Park sought to put those concerns to rest in an email to customers. "You will always be in control of your data and we will be transparent about what data we collect and why," he wrote.
"We never sell your personal information, and Fitbit health and wellness data will not be used for Google ads."
Google expects to close the acquisition in 2020.
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