Google has confirmed that it has officially entered into a definitive agreement to buy Fitbit at a valuation of $2.1 billion. Fitbit is Google’s biggest acquisition in consumer electronics since it paid $3.2bn for smart home company Nest in 2014.
While Google’s offer represents a 19 per cent premium to Fitbit’s closing price on Thursday, it prices Fitbit at little more than half of the $4bn valuation at which it went public four years ago.
“Fitbit has been a true pioneer in the industry and has created terrific products, experiences and a vibrant community of users,” said Rick Osterloh, senior vice-president of devices and services at Google.
“We’re looking forward to working with the incredible talent at Fitbit, and bringing together the best hardware, software and AI to build wearables to help even more people around the world.”
The deal, which is conditional on shareholder and regulatory approval, will test Fitbit customers’ willingness to hand over their health and fitness data to Google. Both companies on Friday promised that Fitbit users’ data “will not be used for Google ads” and customers will be able to “review, move or delete their data”.
Nonetheless, some Fitbit owners may be concerned by the prospect of Google owning intimate information about their weight, sleep and menstrual cycles, as well as their heart rate and daily step count. Often these data are coupled with precise location information, which Fitbit uses to map its users’ workouts, as well as links to social networks such as Facebook and Twitter.
James Park, co-founder and chief executive of Fitbit, said Google was an “ideal partner”.
“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,”
Google has greatly expanded its hardware portfolio in recent years to include Pixel smartphones, smart speakers, Nest thermostats and security cameras, and various entertainment devices. But it is yet to release its own smartwatch to rival Apple directly.
Nonetheless, Fitbit appears to duplicate many of Google’s existing software platforms. In 2014, Google launched Android Wear, an operating system for smartwatches that was re-branded to Wear OS last year. It also offers a health tracking service, Google Fit.
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.
The deal, if approved, is expected to close next year.