A new report from Bloomberg‘s Mark Gurman indicates Fibit is close to finalizing a deal to acquire Pebble.
Unfortunately for the startup and its Canadian founder, Eric Migicovsky, the terms of the deal are far from favourable. Fitbit will reportedly acquire the Pebble for less than $40 million USD.
According to two sources who spoke to Bloomberg under the condition of anonymity, the less than $40 million Fitbit plans to pay for Pebble is not enough to cover the startup’s debt and other financial obligations, nor will Fitbit take on those obligations as part of the acquisition.
Instead, Fitbit is primarily interested in acquiring Pebble for its software talent and intellectual property. The company has reportedly given job offers to only 40 percent of Pebble’s workforce, with very few of the startup’s interface designers and hardware engineers receiving invites to come work at Fitbit.
Whatever stock Pebble employees owned prior to the sale will become worthless after the acquisition is finalized. To cover its debt, Fitbit will sell off its remaining inventory as well as cancel and refund Pebble Time 2 and Core pre-orders.
As for Migicovsky, he will reportedly take on a role at Y Combinator, the Mountain View-based startup accelerator co-founded by Paul Graham.
In an interview with MobileSyrup from 2015, Migicovsky said, “Pebble has money. We make products that get better over time, that do a couple things really well.” At one point Pebble’s founder also claimed that his company’s sales have doubled since the launch of the Apple Watch.
This morning, Migicovsky published a blog post detailing the company’s next steps. Pebble devices will continue to work as normal, though Pebble functionality may be reduced in the future. The company is no longer manufacturing, selling, or promoting its product.
“While dissolving Pebble as you know today is difficult, I am happy to announce that many members of Team Pebble will be joining the Fitbit family to continue their work on wearable software platforms,” Migicovsky wrote, adding that Fitbit will maintain services so Pebble devices continue to work as normal as users transition.
Pebble is now insolvent as Fitbit will not be taking on its debt, though Fitbit assumed a limited set of liabilities including certain contracts, and employee and tax obligations. Within 30 days, creditors will receive more information on how to apply to be paid back.
