Fossil to Buy Wearable Maker Misfit for $260 Million
Fossil has agreed to acquire Misfit, a maker of wearable devices, for $260 million to shore up its technology as it pushes into smartwatches.
Misfit makes a variety of wearable devices, such as fitness and sleep-tracking wristlets and a clip-on smart button that tracks activities. Fossil singled out Misfit's battery-life tech as a particularly appealing component.
"With Misfit, we believe we're poised to capitalize on today's fashion in a differentiated way that helps consumers enhance their lives," Kosta Kartsotis, chief executive officer of Fossil, said on a conference call with analysts. "Simply put, we will marry fashion with technology and distribute it with strong branding across our distribution platform."
Fossil will use Misfit's technology across a selection of its 16 brands, including its namesake label and Skagen. The Texas-based company also makes watches for many designer labels, such as Michael Kors, Tory Burch, and Kate Spade. Such fashion brands are keeping a close eye on consumer adoption of wearables. Kors, for instance, recently announced that it will release a line of "connected fashion accessories" in 2016.
In October, Fossil launched its first line of connected devices, dubbed the Q. The new set of wearables includes tracking bracelets and analog watches with notification electronics built in. The collection's centerpiece is the Fossil Q Founder, a touchscreen watch that runs Android Wear and costs $275.
Over the past year, Fossil executives have repeatedly spoken about their thirst for a piece of the wearable-tech market, calling tech an emerging fashion trend. "We're actually probably more excited about wearable technology and its future right now than we were at the beginning of the year," Chief Financial Officer Dennis Secor said in August.
Fossil's competitors are scrambling to get into wearables, too, banking on connected tech inching toward the mainstream, rather than fizzling out as a gadget fad. Swiss watchmaker Tag Heuer unveiled its first luxury smartwatch, a $1,500 device called the Connected, earlier this week.
Fossil said it expects to close the transaction, which will be funded with cash on hand and bank debt, before the year's end.