UPDATE – The Verge reports Fitbit has just officially announced that it is buying key assets from smartwatch startup Pebble.
Fitbit co-founder and CEO James Park said in a release that the company “sees an opportunity to build on our strengths and extend our leadership position in the wearables category.”
“With this acquisition, we’re well positioned to accelerate the expansion of our platform and ecosystem to make Fitbit a vital part of daily life for a wider set of consumers,” Park continued. The deal was closed yesterday, December 6th.
Bloomberg reports the deal for activity tracker maker Fitbit to buy smartwatch company Pebble is about to close. The publication reports the buyout will cost “less than $40 million,” and includes only the struggling smartwatch maker’s software assets.
The deal is mainly about hiring the startup’s software engineers and testers, and getting intellectual property such as the Pebble watch’s operating system, watch apps, and cloud services, the people said. They asked not to be identified speaking about an unannounced transaction.
Both companies have both struggled to compete in the cooling wearables market. Pebble has struggled to bring to market its new line of wearables, the Pebble 2, Time 2, and the Pebble Core. Fitbit has also experienced its own struggles, and is looking to Pebble’s tech to allow it to better compete with the likes of the Apple Watch, and wearables from the Android Wear camp.
While Fitbit reportedly is ready to hire software engineers and testers from Pebble, the $40 million buyout is said to be solely for the smartwatch maker’s intellectual property, which includes the company’s operating system, watch apps, and cloud services. The purchase amount does not include taking on Pebble’s debt and other obligations. Other assets, including product inventory and server equipment, will be sold off separately, Bloomberg’s sources said.
The sources said that while the Pebble 2 has already begun shipping to Kickstarter supporters, the Time 2 and Pebble Core will be canceled and refunds will be issued to Kickstarter backers. An announcement is said to be imminent.
Once the deal has closed, Pebble’s offices will be closed and former engineers and testers will move to Fitbit’s headquarters in San Francisco.
Fitbit began sending job offers to about 40 percent of Pebble’s employees in the last week. Most of these are software engineers. Very few Pebble interface designers were offered jobs and hardware teams were not offered positions, the people said. Some staff who didn’t get an offer will be given severance packages, one of the people said.
Pebble stock held by employees will become worthless, as the money earned by the sale will go to the company’s debt holders, vendors, equity investors, and Kickstarter backers who ordered the Time 2 and Core devices.