Fitness band industry leader Fitbit is set to acquire struggling smartwatch maker Pebble for a "small amount," according to a report by The Information.
Pebble is said to have been looking for a buyer for a while due to financial issues. It finally finds one in Fitbit, though the company's offer is much smaller compared with the ones that Pebble received from other interested parties in the past.
Fitbit To Acquire Pebble For Up To $40 Million
While The Information did not disclose the specific amount of the purchase agreement in its report, sources have told TechCrunch that the price that Fitbit will pay to acquire Pebble is between $34 million and $40 million.
The maximum amount of $40 million barely covers the debts that Pebble has to pay, amounting to at least $25 million. The company's financial struggles has previously manifested as staff layoffs, with Pebble letting go of 40 employees, equivalent to 25 percent of its workforce, earlier this year in March.
Previous Offers For Pebble
The agreement to sell the company for $40 million comes as a deflating blow against the smartwatch manufacturer, as it received much higher offers in the past.
Back in 2015, watch maker Citizen offered to purchase Pebble for $740 million. Intel, meanwhile, offered to purchase Pebble for a much lower amount of $70 million before the company launched the Pebble 2.
Pebble CEO Eric Migicovsky rejected both purchase offers, and will now have to settle for an acquisition price of $700 million less than what Citizen offered and $30 million less than Intel's pitch.
What Will Happen Next For Fitbit And Pebble?
For the fans of Pebble's smartwatches, the acquisition by Fitbit of the smartwatch maker will come as bad news.
It is reported that Fitbit is acquiring Pebble to be able to gain access to the intellectual properties and technologies of Pebble, including the operating system used by its devices. The Pebble brand will slowly be phased out by Fitbit, with Pebble to only live on internally within Fitbit's products.
While Pebble's last product, the Pebble 2, is more of a fitness tracker than a smartwatch, Fitbit's acquisition of Pebble could mean that the company is looking to expand beyond the fitness band industry that it dominates.
Fitbit has also been experiencing struggles of its own, with its shares declining by 30 percent since its announcement of its results for the third quarter and weak expectations for the fourth quarter after. The company could be looking at the acquisition of Pebble as a means to boost its offerings, which will hopefully lead to higher revenue.