Following media reports of a possible deal earlier this week, Google announced it is acquiring wearables company Fitbit for $7.25 per share in cash, valuing the company at $2.1 billion.
Fitbit launched in 2007 and was considered a pioneer of the consumer fitness tracking market, quickly becoming the market leader. Other players have since entered the market including Apple, Garmin, and Samsung.
Shares of Fitbit rose 15% on Friday following the announcement. In July 2015, Fitbit's stock was valued at $47 per share.
“More than 12 years ago, we set an audacious company vision—to make everyone in the world healthier. Today, I’m incredibly proud of what we’ve achieved towards reaching that goal. We have built a trusted brand that supports more than 28 million active users around the globe who rely on our products to live a healthier, more active life," James Park, co-founder and CEO of Fitbit, said in a statement.
Google is an ideal partner to advance the company's mission, Park 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," Park said.
Rick Osterloh, senior vice president, devices & services at Google said the tech giant plans to bring leverage Fitbit's capabilities to bring together the "best hardware, software and AI to build wearables to help even more people around the world."
"Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users," Osterloh said.
Earlier this week, on October 28, Reuters and CNBC both reported that Google parent company Alphabet was eyeing the fitness tracker and smartwatches market and had made an offer to acquire Fitbit, citing sources familiar with the matter.
Industry analysts see this as a data play by Google as Fitbit's devices now collect data—such as number of steps taken, sleep duration, menstrual cycles and heart rate—from 27.3 million users.
"Google has shown themselves adept at making similar moves in the past on data (e.g. Waze) and also worth noting that they are behind both Apple and Samsung in wearables, so Fitbit makes sense for Google," Nilesh Chandra, health care data expert at PA Consulting, told Fierce Healthcare in response to rumors of the potential deal. "To many, patient data represents the holy grail and the true catalyst for change in the healthcare industry. With big tech moving aggressively in this direction, Google's latest bid to acquire Fitbit is perfectly consistent with its interest in democratizing access to patient data."
Google's hardware business is still relatively young, Osterloh wrote in a blog post, but the company has built products like Pixel smartphones, Pixelbooks and Nest devices. Google has made progress with partners in the wearables space with Wear OS and Google Fit but sees an opportunity to invest even more in Wear OS as well as introduce Made by Google wearable devices into the market.
"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," he wrote. "Google aspires to create tools that help people enhance their knowledge, success, health, and happiness. This goal is closely aligned with Fitbit’s long-time focus on wellness and helping people live healthier, more active lives."
Fitbit has sold more than 100 million devices and supports a global community of millions of active users, utilizing data to deliver unique personalized guidance and coaching to its users, the company said. Fitbit has focused on being more than just a hardware company and worked to build an immersive experience for consumers from the wrist to the app, designed to help users understand and change their behavior to improve their health.
The company has been partnering with health insurers and deepened its reach into healthcare with a new premium subscription service for users that offers coaching and personalized insights mined from its health data. In August, Fitbit said it had signed a contract with the Singapore government to provide fitness trackers and services in a health program it said could reach up to 1 million users.
Fitbit will continue to remain platform-agnostic across both Android and iOS, the company said.
Fitbit and Google executives said strong privacy and security guidelines will continue to be a major priority.
Google will never sell personal information to anyone and Fitbit health and wellness data will not be used for Google ads, Fitbit and Google executives said. Fitbit users will have the choice to review, move or delete their data, according to the companies.
The deal is expected to close in 2020, subject to customary closing conditions, including approval by Fitbit’s stockholders and regulatory approvals.
Qatalyst Partners LLP acted as financial advisor to Fitbit and Fenwick & West LLP acted as legal advisor.