• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Will a Fitbit-Alphabet Merger Actually Happen?

There are many factors in play and the deal could be scuttled by the Justice Department.
By JONATHAN HELLER
May 18, 2020 | 10:30 AM EDT
Stocks quotes in this article: FIT, GOOGL

One of the more interesting pieces of information that was revealed late Friday, was that wearables name Fitbit (FIT) is attempting to get into the ventilator market. The company will reportedly submit its technology for lower-cost ventilators to the FDA under the Emergency Use Authorization. If it gets approval, the company plans to utilize an existing vendor in Taiwan for production. You've got to hand it to the company form jumping into the Covid-19 fray.

FIT has certainly been off the radar for many months, following the November announcement of a deal with Alphabet (GOOGL) to acquire the company for $2.1 billion or $7.35/share. More than six months later, FIT trades at an 11% discount to the deal price, and with each passing day, I still wonder whether that deal will ever actually get done.

There's certainly been some noise about the transaction from watchdog groups. Last week, European consumer group BEUC announced its opposition to the transaction in a nutshell because it would allow Google to have access to too much information, increasing the power of a small number of large technology companies. These comments come as Google briefs European Union antitrust regulators about the deal.

There are still hurdles in the U.S. In early April, the Department of Justice began a "second request review" into the deal, which may indicate that it is under additional scrutiny. Keep in mind that was five months after the deal was initially announced. In addition, the DOJ is also investigating Google for anti-competitive behavior, which Attorney General William Barr told the Wall Street Journal on March 23rd would be concluded by early summer. It is doubtful whether a decision on the Fitbit-Google deal would be done until then.

If the deal is scuttled by the DOJ, which it certainly could be, FIT is entitled to a $250 million breakup fee. The company currently sits on about $425 million, or $1.60 per share in cash and marketable securities. While the breakup fee would nicely increase the company's liquid resources, if the deal falls through, the stock will likely tank. Post-deal announcement results have been lackluster. The first quarter loss of 24 cents/share, missed the 16-cent loss consensus, while fourth quarter 2019 results were also below consensus.

Prior to the November deal announcement, shares were languishing below $4, and breached $3 in August. I suspect FIT might see those levels again, and perhaps lower if the deal falls through.

(Alphabet is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jonathan Heller had no position in the securities mentioned.

TAGS: Mergers and Acquisitions | Investing | Markets | Stocks | Trading

More from Investing

Fed Talk Prompts Some Buying

James "Rev Shark" DePorre
May 17, 2022 4:37 PM EDT

This is still just bear-market bounce, but that doesn't mean it can't run for a while.

What's Up? DOCS Might Be Soon

Bruce Kamich
May 17, 2022 2:45 PM EDT

Shares of medical network platform Doximity are positioned for a rally, according to the charts.

The Safe Bet for DraftKings? Checking the Charts, First

Bruce Kamich
May 17, 2022 2:00 PM EDT

Let's see if DKNG could rally from here.

J.B. Hunt's 18 Wheelers Are Ready to Roll Again

Bruce Kamich
May 17, 2022 1:15 PM EDT

Let's see what the charts and indicators look like.

You Don't Have to Takes Sides on Apple (If Your Timing Is Right)

Ed Ponsi
May 17, 2022 11:51 AM EDT

It appears that hedge fund owner Michael Burry is betting against AAPL and Warren Buffett is betting on the stock. But let's look at their strategies and why they might both turn out winners.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 03:07 PM EDT PAUL PRICE

    Why is Wal-Mart Down Big Today?

    Besides its poor earnings report Wal-Mart (WMT) wa...
  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • 08:51 AM EDT PAUL PRICE

    Advice From the Future...

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login