Alphabet has made an offer to buy Fitbit and this has lead to a rise in the latter’s stock.
According to anonymous sources, Alphabet is currently in talks with technology company Fitbit to acquire its company. If the deal goes through, Alphabet may become Apple’s major competition in the health and fitness tracking space. Apple’s popular smartwatch has made it a major player in the wearable fitness tracking space. Its smartwatch offers built-in fitness tracking features and has continued to gain popularity since its release.
Alphabet’s move to buy Fitbit was first reported by Reuters. However, the details of the negotiation were not disclosed. It is still unknown how much the former is offering to acquire the company.
Although Google does not currently produce its own smartwatch, it had recently signed a $40 million deal with Fossil for hybrid smartwatch tech. Google wants users to be able to access its services from anywhere they are. The company which describes its hardware strategy as “ambient computing” would offer greater value to users if it acquires Fitbit. In a bid to reinforce its healthcare strategy, Google hired David Feinberg, the former CEO of Geisinger Health.
Many have said that Fitbit will benefit from Alphabet’s support if it accepts its offer. In the company’s July earnings release, it stated that the poor sales of its new lightweight watch were unexpected causing it to lower its guidance for the year. An acquisition will give the company the much-needed boost to compete with Apple which has dominated the smartwatch market. Fitbit may also have to pit against Google itself if the acquisition move fails. Rumour has it that Google is working on a Pixel Watch.
Fitbit stock rose about 30 percent, adding over $330 million to its market cap. Fitbit and Alphabet have declined comment on the acquisition. While Google is said to have made a formal offer, there’s no guarantee that Fitbit and Google will reach an agreement.