Watch manufacturer Fossil has acquired Misfit, the maker wearable watches and Internet-connected devices, for $260 million.
The deal gives Fossil a way to get into the buzzy wearables space and include fitness tracking technology into its own watch brands, which include Fossil and Skagen. Misfit's founder, Sonny Vu, will become Fossil's president and chief technology officer of connected devices.
Misfit was best known for the Shine, a fitness tracker that competes with Fitbit, Jawbone's UP band, as well as the Apple Watch. It also sells a line of accessories that turn wearables into bracelets or a pendant, along with a connected light bulb, called the Bolt, and a sleep tracker, called the Beddit.
The acquisition, done with a mix of cash and debt, is not particularly surprising for Fossil. In an earnings call earlier this year, the company's CEO, Kosta Kartsotis, had hinted that the company would do more in the world of wearables.
At the time, he said the more successful devices in the future would be "smarter watches." Over the past few years, a number of smartwatch makers have burst onto the scene, but many consumers are holding off on buying them.
While Misfit had attracted over $60 million in funding from the likes of Khosla Ventures and Chinese mobile giant Xiaomi, the company has lagged behind rival Fitbit (fit) and Jawbone in overall wearable shipments, according to a recent IDC report. It also behind Samsung and Apple (aapl) in the narrower category of smartwatches, even though its version is far cheaper than the other two.
Fossil Group's shares (fosl) fell 12% in after hours trading to $44.28.
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