Google is acquiring Fitbit for $2.1 billion

Just days after it was reported that Google was close to buying Fitbit, Google and Fitbit today confirmed the purchase: Google will pay $7.35 per share for the wearables company in an all-cash deal that values Fitbit at $2.1 billion.

Relatively speaking, this is a great landing for Fitbit . The company’s price has fluctuated significantly as it worked to adjust to a changing market and fumbled on some of its more recent launches. In summer 2015, it hit an all-time high of $51.90, but this August it went as low as $2.81 after more than two years hovering below $7 — a pattern that changed dramatically after the first reports of Google’s interest began to surface in September.

The match could ultimately prove beneficial for both parties.

Google has struggled to make much of a dent in the wearables category. But wearables is still young market, and at a time when Apple has been seeing its strongest category growth in the division that houses its own wearables effort, the Apple Watch, Google has never bowed out. In January of this year, the Android giant purchased a large chunk of IP from watchmaker Fossil for $40 million — a move that in retrospect looks like a setting of the stage for what was to come today.

While Google has also invested in a lot of its own in-house development, buying Fitbit represents a step-change and a bolt-on of years of effort focused specifically on the wearables category.

“Over the years, Google has made progress with partners in this space with Wear OS and Google Fit, but we see an opportunity to invest even more in Wear OS as well as introduce Made by Google wearable devices into the market,” Google device SVP Rick Osterloh wrote in his blog post announcing the deal. “Fitbit has been a true pioneer in the industry and has created engaging products, experiences and a vibrant community of users. 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.”

Sensing inevitable concern around Google’s upcoming access to a bevy of health data, Osterloh looked to temper criticism with reassurance that it will not be using the information for advertising. “We will never sell personal information to anyone,” the executive wrote. “Fitbit health and wellness data will not be used for Google ads. And we will give Fitbit users the choice to review, move, or delete their data.”

Fitbit, meanwhile, has had issues maintaining growth in recent years. The company first pioneered and then dominated the wrist-worn tracker space, but in more recent years it has struggled as the smartwatches category has grown and encroached and taken over Fitbit’s tracker territory. The company has had luck with the Versa watch, the result of its own acquisition of Pebble, Vector and Coin, while working to pivot much of its focus into healthcare.

But following the disappointing performance of the stripped-down Versa Lite smartwatch, Fitbit announced a premium service earlier this year, set to offer users more insights into the information its products collect. Fitbit has also worked to be recognized as a serious health product, in the wake of the Apple Watch’s successes. The company has announced several partnerships with health care companies.

“More than 12 years ago, we set an audacious company vision – to make everyone in the world healthier,” Fitbit CEO and co-founder James Park said in a statement. “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. Google is an ideal partner to advance our mission. 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.”

SAN FRANCISCO, CALIFORNIA – OCTOBER 04: (L-R) Fitbit Co-founder/President & CEO James Park and Fitbit Co-Founder & CTO Eric Friedman speak onstage during TechCrunch Disrupt San Francisco 2019 at Moscone Convention Center on October 04, 2019 in San Francisco, California. (Photo by Kimberly White/Getty Images for TechCrunch)

No immediate word on how the deal will impact either company, but if Google’s Nest acquisition is any indication, the acquisition could be a gradual one, as Fitbit continues to release products in its pipeline. Fitbit notably partnered with Amazon to bring Alexa to the recently released Versa 2 — a first for a wearable. With Google in charge of one of Alexa’s chief competitors, however, one expects future versions of the device will ship with Assistant on-board.

Beyond that, the arrival of Fitbit’s IP coupled with Fossil’s IP could finally be the shot to the arm Wear OS needs. One need look no further than Google’s acquisition of a chunk of HTC’s mobile division to build out its Pixel devices as an example of how the deal could ultimately shape its hardware, moving forward. The arrival of a Pixel Watch seems inevitable, as Google looks to build a Wear OS division as robust as its home and mobile offerings.

Notably, all have been as much the result of acquisitions (Nest and HTC, respectively) as organic, in-house growth.

The deal is expected to close at some point next year, pending the standard regulatory and stockholder approval.