Alphabet Inc.’s (NASDAQ:GOOGL) Google has announced that it is buying smartwatch maker Fitbit Inc. for $2.1 billion U.S. in an all cash deal.
Google will pay $7.35 U.S. a share for San Francisco-based Fitbit, according to a statement issued Friday morning. That represents a 71% premium to Fitbit’s stock price. Fitbit shares jumped 17% on the news. The acquisition is Google’s second major purchase this year, after it agreed to pay $2.6 billion U.S. for cloud software provider Looker in June.
The deal is sure to attract regulatory scrutiny. State and federal authorities are investigating Google for potential anti-competitive practices related to how it handles consumer data and operates in the digital-advertising market. The two companies addressed the concerns by pledging to be transparent about the data Google collects and why.
Google is increasingly building up its hardware capabilities. It has a growing number of smartphones and laptops, and provides a free wearable operating system called "Wear OS" for other companies to use but has yet to build its own watch. Buying Fitbit gives Google a new platform along with access to the company’s more than 27 million active users.
Fitbit has been struggling to compete with Apple Inc. (NASDAQ:AAPL) and others in the smartwatch market. Its shares sunk to a low of $2.85 U.S. a share at the end of August. The stock has recovered since news broke that Google might buy it but is still far below Fitbit’s $20 U.S. per-share price in the company’s 2015 initial public offering. The deal with Google is expected to close early next year.
