FIT - Will Alphabet Really Buy Fitbit in 2020?
It's been four weeks since Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) put a ring on it, announcing plans to buy Fitbit (NYSE: FIT) in a $2.1 billion deal. The transaction would cash out investors in the wearables pioneer at $7.35 a share. The stock nearly traded that high on the day the acquisition was announced, but it has been drifting lower lately.
Fitbit shares closed at $6.78 on Monday. With the transaction set to close at some point in 2020, it would seem that buyers at that price could bank on a pretty hearty 8.4% gain for parking their money in a situation that's largely immune to the usual fluctuations of stock market investing-- especially if the deal can be wrapped up in the first half of the year. However, discounts don't widen like this for no reason. If the arbitrageurs who make their living sniffing out pricing inefficiencies aren't jumping on this opportunity, that suggests a timely closing of this transaction isn't a slam dunk.
Image source: Fitbit.