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Rumor: Alphabet in talks to acquire Fitbit

Fitbit could be set to join the Alphabet stable of brands. (Source: Fitbit)
Fitbit could be set to join the Alphabet stable of brands. (Source: Fitbit)
Google’s parent company Alphabet is said to be deep in negotiations to buy fitness wearables company Fitbit. Fitbit had indicated late last month that it was interested in a sale of the company and it looks like it might likely end up either as part of Google’s product lineup or as a standalone Alphabet backed brand.

Although Apple has by far the largest slice of the wearables market in terms of profit, it is actually Fitbit that has the higher brand recognition in the fitness wearables segment. It also sells at least 18 percent more units than Apple at last count, but it has started to cede market share to Apple. Sensing that if it doesn’t get stronger backing to take on the marketing might of Apple, the company started soliciting offers to buy the company last month.

According to a new report by Reuters, it looks like Google’s parent company Alphabet has put forward an offer to acquire the company that is currently under consideration. Fitbit shares jumped 27 percent on the news giving it a market capitalization of $1.4 billion. Even if Alphabet offered a premium for Fitbits shares, it would still be a relatively small, but potentially ideal acquisition, given that Google has struggled to make inroads into the wearables space with its Wear OS.

If the deal goes through, it remains to be seen where Fitbit could end up in Alphabet’s plans. Alphabet has stated that it would like to own a company for each letter of the alphabet and Fitbit would slot in nicely into the ‘F’ position. There is certainly an argument for maintaining it as a separate brand given its brand recognition although Google would undoubtedly be keen to gain an instant and expanded foothold in the wearables space. Then again, if that were to be the case, Google could have easily acquired the company itself.

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Sanjiv Sathiah, 2019-10-29 (Update: 2019-10-29)