Providing more details on Fitbit’s buyout of Pebble, Bloomberg reports that the buyout will cost “less than $40 million” to Fitbit and will be mainly related to hiring Pebble’s software engineers and other intellectual assets like its operating system and cloud services.
Interestingly, Fitbit buyout price of less than $40 million is less than the combined value of Pebble’s debt and other obligations, with the former not taking on any of Pebble’s debt. Other assets that Pebble has like its product equipment, unsold inventory and servers will be sold off separately in a bid to pay off the company’s debtors.
The report states that Fitbit has already sent out job offers to around 40 percent of Pebble’s software engineers, with the majority of the interface designers and hardware team being shown the door and only being offered severance packages. The company plans on using the expertise of Pebble’s engineers and its relationship with developers to its advantage. The wearable company launched its first smartwatch, the Fitbit Blaze, earlier in the year but it failed to set the sales chart on fire.
The deal will make the Pebble stock held by employees “worthless,” with the money going to debt holders, vendors, and some of the company’s equity investors. The buyout will also see Pebble cancel orders for its Time 2 and Pebble Core smartwatches, with the company issuing refunds to Kickstarter backers.[Via Bloomberg]