Google parent company Alphabet reached a deal to buy wearable fitness device-maker Fitbit for $7.35 per share, or about $2.1 billion in cash, the companies said.
Fitbit shares jumped 16% on the news. Shares of Alphabet were up 0.8%. Reuters reported Alphabet had made an offer for Fitbit Monday.
Fitbit has fought to maintain its status in an increasingly competitive wearable-tech market. The company cut prices on some of its devices earlier this year and launched a premium subscription product. In July, it lowered its guidance for the full year, citing disappointing sales of its new Versa Lite smartwatch.
According to data from International Data Corp. the global wearable tech market is led by Chinese company Xiaomi Corp, which had a 17.3% market share in the second quarter. Apple was the number two player, followed by Fitbit, which controlled 10% of the market.
In January, Google announced it was buying smartwatch technology from Fossil for $40 million. Last year it hired the former chief executive officer of Geisinger Health, David Feinberg, as part of its health-care strategy.
“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,” analyst Craig Hallum said in a note.
Fitbit said it would continue to remain platform-agnostic across both Android and iOS.
“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,” Fitbit chief executive officer James Park said.
Google said it would not use health and wellness data from Fitbit for advertising.
“Strong privacy and security guidelines have been part of Fitbit’s DNA since day one, and this will not change,” the company said in a statement. “Fitbit will continue to put users in control of their data and will remain transparent about the data it collects and why.”
The deal is expected to close in 2020.