Fitbit is currently finalising the deal, according to a report from The Information today. As Ars Technica writes, Pebble is selling itself for “a small amount” of $34 to $40 million. Pebble has previously declined other offers worth considerably more. Last year, Citizen put in a bid for $740 million. A few months ago, Intel attempted a purchase at $70 million.
Pebble is thought to have declined the deals in a last ditch effort to set aside its problems and launch the Pebble 2 smartwatch, unveiled earlier in the year. Intel had wanted the company to postpone the release. Pebble’s troubles haven’t gone away though. The company is known to be struggling for cash with CEO Eric Migicovsky previously admitting money is “pretty tight.”
Fitbit is paying very little to acquire Pebble, a source close to the company told TechCrunch. The majority of the $40 million will be used to lift the company out of the red. Fitbit is “barely covering their [Pebble’s] debts,” the person said.
Pebble is widely credited with having launched the first successful smartwatch. In 2012, it unveiled the original Pebble, funded by a Kickstarter campaign that proved to be one of the largest ever created on the site. It has added new versions, updated old ones and expanded into fitness tracking in the years since.
Low uptake for smartwatches has had an impact though. Recently, the company has been forced to start scaling back its ambitions as money has become more of an issue. In March, it laid off 25 percent of its workforce as part of a cost-cutting program designed to keep the company afloat.
New owner Fitbit has its own issues too. The company is also struggling to convince the masses to adopt wearables as sales plummet and new devices fail to attract consumer interest. Its new Blaze smartwatch hasn’t been received as well as the company anticipated, despite initially strong sales. Fitbit is currently trading at around $8.40 a share, down from $50 when it listed on the New York Stock Exchange in 2015.
By purchasing Pebble, Fitbit could give itself another chance to gain mass appeal. It will now have access to the smartwatch technology that its core fitness trackers are lacking. According to The Information’s report, Fitbit intends to phase out the Pebble brand once the purchase is complete. There will be no new devices and Pebble’s intellectual property and software will instead be integrated into future Fitbit products.
Neither Fitbit or Pebble have officially announced the deal. The rumours have been confirmed by several independent sources though, adding credence to the claims. The sale has been anticipated by analysts for many months as Pebble’s former success has fallen away.
While it’s not a formal confirmation, Pebble appeared to signal the end in a tweet this morning. It used an emoticon in an apparent farewell message, suggesting the colourful smartwatch maker’s four year run is over.
