Fitbit shares rise as filing reveals bidding war between Google and mystery firm

Key Points
  • Two firms were aggressively bidding to acquire Fitbit, according to a recent SEC filing.
  • Google ultimately won with an offer of $7.35 per share, but another firm had offered $7.30 per share.
  • Without the bidding war, Fitbit may have been sold for far less.
James Park
Mark Neuling | CNBC

Fitbit's stock was up more than 3.7% Tuesday morning after an SEC filing revealed a bidding war between Google and a mystery firm for the fitness wearable maker. Google announced its intentions to acquire Fitbit on Nov. 1 for about $2.1 billion in cash.

CNBC learned later on Tuesday that the mystery firm was Facebook.

The filing says that several firms met with Fitbit to discuss an acquisition but that, ultimately, only Google and another company offered serious bids. It's unclear who the other firm was, but Amazon has been aggressively exploring the health-tracking wearables space and UnitedHealthcare and Fitbit had an existing wellness partnership program called Motion.

Facebook revealed as mystery firm bidding for Fitbit
Facebook revealed as mystery firm bidding for Fitbit

Discussions with a so-called "Party A" began on June 11, according to the filing, when the CEO of that company and Fitbit CEO James Park had dinner "and discussed generally the wearables technology landscape." Later on August 20, Fitbit's senior management also provided "an overview of Fitbit's business to members of Google's management."

On Oct. 2, Google "submitted a written non-binding indication of interest to acquire Fitbit for $4.59 per share," a proposal that was denied by Fitbit's board, which asked for $6.00 per share.

On Oct. 11, Google came back with $5.05 a share.

A day later, on Oct. 12, the mystery firm "Party A" bumped the bid up to $5.90, according to the filing. Google, on the same day, offered $6.50 per share.

"Later that same afternoon, representatives of Qatalyst Partners informed Party A that Fitbit had received an acquisition proposal with a price that was meaningfully higher than Party A's proposed price of $5.90 per share, and that Party A would need to significantly increase its offer within the next few hours as our Board would be meeting to discuss the status of the parties' proposals," the filing said.

The bidding increased rapidly that evening.

Fitbit's board asked its bank on the deal, Qatalyst Partners, to get final offers from both companies. Google offered $7.05 a share but, as Fitbit was working on an exclusivity agreement with Google, the CEO of Party A offered a verbal agreement to acquire Fitbit for $7.30 a share, its best and final offer.

On Oct. 13, Google submitted its final offer to acquire Fitbit at a price of $7.35 a share. "The revised proposal was conditioned on Fitbit immediately entering into the exclusivity agreement," the filing said.

The deal was announced on Nov. 1 when Google parent Alphabet announced it would acquire Fitbit for the agreed-upon deal of $7.35 a share, or about $2.1 billion in cash. But, had there not been a second firm bidding, the deal could have fallen apart, or Google could have agreed to pay far less.

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