Alphabet Offers To Purchase Fitbit

Google’s parent company Alphabet Inc. (NASDAQ: GOOG) has made an offer to acquire U.S. wearable device maker Fitbit Inc. (NYSE: FIT) for an undisclosed amount. Fitbit shares rose 27 percent on the news, giving the company a market capitalization of $1.4 billion. Fitbit shares are now up more than 12 percent for 2019.

Reports first emerged about a month ago that Fitbit was putting itself on the auction block. The deal would make Alphabet the No. 2 player in the smartwatch market behind Apple, which currently holds about half of the global smartwatch market in terms of units shipped. Buying Fitbit could also help Alphabet measure up to Apple in the health and fitness space.

Fitbit helped pioneer the wearable devices craze. Its fitness trackers monitor a wide variety of health indicators, including daily steps taken, calories burned, and distance traveled. They also measure floors climbed, heart rate, and sleep duration and quality. The company recently signed a contract with the Singapore government to provide fitness trackers and services to up to 1 million users as part of a national health initiative.

Buying Fitbit would mean that Alphabet would control two disparate smartwatch platforms. The company’s Google division licenses its Wear operating system to companies such as Fossil Group Inc. but does not currently make its own smartwatch. In January, Fossil announced that it would sell its intellectual property related to smartwatch technology under development to Google for $40 million. It is not clear what Google plans to do with these assets.

Fitbit recently launched its latest smartwatch, Versa 2, after seeing disappointing sales of its cheapest smartwatch Versa Lite. The soft sales prompted Fitbit to cut its 2019 revenue forecast in July. The company is scheduled to report third-quarter earnings on Nov. 6.

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