Trading of shares in wearable device maker Fitbit was suspended today following a report that Google owner Alphabet has tabled a takeover bid.
The Silicon Valley tech giant has held discussions with Fitbit, although there is no guarantee a deal will be secured, Reuters reported, citing people familiar with the matter. It is unclear how much the takeover could be worth.
While Google has developed some tech hardware, such as its Pixel 4 smartphone, it is yet to develop any wearable devices, and the acquisition would put it in competition with rivals such as Apple and Samsung.
Shares in Fitbit rose as much as 27 per cent before trading was halted, giving the firm a market capitalisation of roughly $1.4bn (£1bn). Shares in Alphabet also ticked up almost 2.5 per cent.
Fitbit, which tracks users data such as daily steps, calories burned and distance travelled, has established itself as a major player in the wearable tech market. However, it has seen its domination threatened by cheap new alternatives from Chinese rivals such as Huawei and Xiaomi.
The firm will also be wary of Apple’s recent decision to prices its Series 3 Apple Watch at $199/£199, the same price as the full Fitbit model.
Fitbit recently launched a cheaper model, called the Versa Lite, but sales have been disappointing and the company cut its 2019 revenue forecast in July as a result.
Google’s reluctance to move into the wearables market has come as a surprise to many in the industry, but a takeover of Fitbit could mark a new strategy of focusing on health-focused devices that open the door to valuable user data.
Leo Gebbie, an analyst at CCS Insight, said Fitbit had an “exceptionally strong brand” in the wearables sector thanks to its large user base and associated data.
“This has huge appeal to a data-driven business like Google,” he said. “Although Google has been lukewarm in its commitment to wearables recently, this indicates it is serious about the segment and could provide a boost to its ambitions.”
Google and Fitbit declined to comment.
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