Google’s $2.1 billion Acquisition of Fitbit

By Chris Leung and Lukas Bruell (University of Warwick) - Date: 24/11/2019

 


Overview of the deal

  • Acquirer: Google (NASDAQ: GOOG)

  • Target: Fitbit (NYSE: FIT)

  • Estimated value: $2.1 bn

  • Announcement date: 1st November 2019

  • Acquirer Advisors: NA

  • Target Advisors: Qatalyst Partners

The emerging trend of wearable devices in recent years has been a revelation as a growth catalyst for the technology industry that saw Apple’s wearables revenue increasing by 54% Y-O-Y in Q3 2019. Although Google already has Wear OS – its in-house operating system for wearable devices – and Google Fit, the internet company has sought to integrate its software onto hardware products.

The structure is an all-cash deal that sees Google paying $7.35 per share – a 19% premium to Fitbit’s closing price on 31st October, valuing Fitbit at $2.1 billion on a fully diluted equity value base. Google’s offer seems a bargain to Fitbit’s $20 IPO price in June 2015, closing at a high of $47.49. However, the healthtech company is in dire need of stimulus with revenues stuck between the $1.4 - $1.5 billion range over the past three years. The acquisition will improve Google’s competitiveness in the health and wellness sector especially if core elements of Google Fit can be integrated together with Fitbit’s fitness tracking features.

“With Google’s resources and global platform, Fitbit will be able to accelerate innovation in the wearables category, scale faster and make health even more accessible to everyone,” - James Park, Fitbit Co-founder and Chief Executive

Company Details (Google)

Google is a technology company that dominates the internet-related industry, specialising in online advertising, search engine, cloud computing, software and hardware. Google has increasingly diversified beyond its core search engine into hardware and other ventures.


- Founded in 1998, headquartered in California, United States.

- CEO: Sundar Pichai

- Number of employees: 98,771 (2018)


- Market Cap: $906.96B - EV: $804.57B

- LTM EV/Revenue: 5.19x - LTM EV/EBITDA: 18.26x

- LTM EV/Revenue: 5.19x - LTM EV/EBITDA: 18.26x


Company Details (Fitbit)

Fitbit is a pioneer in the wearables sector producing wireless wearable devices that gather data and metrics on activities involved in fitness. The company has since sold more than 100 million devices with 28 million monthly active users on their Fitbit OS that delivers personalised insights to help reach health and fitness goals.


- Founded in 2007, headquartered in California, United States.

- CEO: James Park