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Google enters wearables market with $2.1bn Fitbit deal

As search giant takes on the likes of Apple and Samsung.
Fitbit has been offered $7.35 per share in cash. Image: David Paul Morris/Bloomberg

Alphabet-owned Google will buy fitness tracker pioneer Fitbit for $2.1 billion, as the search giant takes on Apple and Samsung in the fast-growing market for wearable devices.

Google said on Friday that it sees an opportunity to introduce “Made by Google” wearable devices into the market and invest more in wearable technology.

Fitbit has been offered $7.35 per share in cash, the company said, a premium of about 19% to the stock’s closing price on Thursday. The company’s shares were trading at $7.18 in trading before the bell.

Fitbit shares have gained more than 40% since Reuters reported on Monday that Google had made an offer for the maker of the popular colourful fitness trackers.

The deal comes at a time when Fitbit’s share of the fitness tracking market is being threatened by deeper-pocket companies such as Apple and Samsung Electronics as well as cheaper offerings from China’s Huawei Technologies and Xiaomi.

“We believe Google is a natural fit. The deep health and fitness data, coupled with the 28 million active users on the Fitbit platform, offer a tremendous value,” Craig Hallum analysts wrote in a note.

Fitbit said if Google fails to obtain antitrust approval for the deal, the internet company would need to pay a termination fee of $250 million.

Fitbit also said health and wellness data of its users would not be used for Google ads. Google said it would give Fitbit users the choice to review, move or delete their data.

Qatalyst Partners was financial adviser to Fitbit on the deal, which is expected to close in 2020. Fenwick & West was the legal advisor.

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