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Thursday, March 28, 2024 | Back issues
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Fitbit Execs Lined Up Massive Perks in Google Deal, Class Claims

Shareholders claim in a class action that Google's $2.1 billion bid to acquire wearable fitness technology company Fitbit undervalues the company and came to fruition through an unfair process.

(CN) - Shareholders claim in a class action that Google's $2.1 billion bid to acquire wearable fitness technology company Fitbit undervalues the company and came to fruition through an unfair process.

Fitbit and Google announced the acquisition on November 1, stipulating that investors of San Francisco-based Fitbit will receive $7.35 in cash for each share of common stock they own. According to the suit, the price is 63% lower than the 2015 initial public offering price of $20, and well below the all-time high of $50.

The lawsuit states that Fitbit investors will not have future ownership in the combined companies, and in approving the acquisition, the company’s lead executives breached their duty of loyalty to investors for their own benefit by setting themselves up to receive “massive financial benefits,” the suit alleges.

Despite positive financial performance in 2019 due to increased memberships and sales, the class alleges Fitbit executives still caused the company to be sold at an insufficient price.

“Clearly, based upon the positive outlook and increases in revenue, the company is likely to have tremendous future success and should command a much higher consideration than the amount contained within the proposed transaction,” the complaint states.

Investors are seeking to stop the deal which includes an $80 million termination fee payable to Google if the merger is terminated. The class is represented by Evan J. Smith, Esquire of Brodsky & Smith, LLP in Beverly Hills, Calif.

Categories / Business, Consumers, Financial, Health, Securities, Technology

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