Google owner Alphabet in talks to buy Fitbit

Fitbit shares rose 27 per cent on the news of Alphabet's offer to acquire the wearable device maker, giving it a market capitalisation of US$1.4 billion. Alphabet shares rose 2 per cent to US$1,293.49.
Fitbit shares rose 27 per cent on the news of Alphabet's offer to acquire the wearable device maker, giving it a market capitalisation of US$1.4 billion. Alphabet shares rose 2 per cent to US$1,293.49.PHOTO: REUTERS

Exact offer unknown as Alphabet eyes slice of crowded market for fitness trackers and smartwatches

NEW YORK/SAN FRANCISCO • Google owner Alphabet has made an offer to acquire US wearable device maker Fitbit, as it eyes a slice of the crowded market for fitness trackers and smartwatches, people familiar with the matter said on Monday.

While Google has joined other major technology firms such as Apple and Samsung Electronics in developing smartphones, it has yet to develop any wearable offerings.

There is no certainty that negotiations between Alphabet and Fitbit will lead to any deal, the sources said, asking not to be identified because the matter is confidential.

The exact price that has been offered for Fitbit is not known.

Both Alphabet and Fitbit declined to comment.

Fitbit shares rose 27 per cent on the news, giving the company a market capitalisation of US$1.4 billion (S$1.9 billion). Alphabet shares rose 2 per cent to US$1,293.49.

A deal for Fitbit would come as its dominant share of the fitness tracking sector continues to be chipped away by cheaper offerings from companies such as China's Huawei Technologies and Xiaomi.

Fitbit's fitness trackers monitor users' daily steps, calories burned and distance travelled. They also measure floors climbed, sleep duration and quality, and heart rate.

Fitbit, which helped to pioneer the wearable device craze, has been partnering health insurers and making tuck-in acquisitions in the healthcare market as part of efforts to diversify its revenue stream.

Analysts have said that much of the company's value may now lie in its health data.

Fitbit cut its 2019 revenue forecast in July, blaming disappointing sales of its newly launched cheapest smartwatch Versa Lite.

The watch is priced at US$160, compared with US$200 for the full version. It can track workouts and heart rate but lacks features such as the ability to store music directly.

In August, Fitbit said it had signed a contract with the Singapore Government to provide fitness trackers and services in a health programme that it said could reach up to one million users.

Fitbit in August also launched its latest smartwatch, Versa 2, adding Amazon's voice assistant Alexa, online payments and music storage to the device's capabilities.

It is scheduled to report its third-quarter earnings next Wednesday.

Fitbit would not be the first deal that Google would be carrying out in the wearables space.

Fossil Group said in January that it would sell its intellectual property related to smartwatch technology under development to Google for US$40 million.

Google's plans for these assets are not clear.

Reuters reported last month that Fitbit was speaking to investment bank Qatalyst Partners about exploring a sale.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 30, 2019, with the headline 'Google owner Alphabet in talks to buy Fitbit'. Print Edition | Subscribe