According to several people familiar with the situation, on Christmas Eve, Fitbit expressed interest in acquiring Jawbone assets, including its intellectual property rights, and also needed to resolve ongoing lawsuits between the two San Francisco companies.
Fitbit and Jawbone have been suing each other for patent infringement and theft of trade secrets for more than a year.
However, when Fitbit proposed an acquisition price that was only a fraction of Jawbone's $1.5 billion valuation a year ago, these preliminary negotiations quickly failed.
BlackRock has the first claim for Jawbone's subsequent sale, forcing it to find a solution to the current financing crisis. According to these people, Jawbone is already looking for other bidders. Jawbone did not negotiate an agreement that its management believes is reasonably sold, and is now looking for new financiers to focus on clinical medical devices.
According to people familiar with Jawbone's situation, Jawbone is about to get funding from a new investor and will revitalize the company and keep it as an independent entity.
Both Fitbit and Jawbone declined to comment.
Although Jawbone has raised more than $1 billion in financing for more than 15 years, it has faced a series of financing difficulties in the past two years.
Last year, Jawbone found that its valuation fell by half after raising $165 million. In 2015, when it was valued at $3 billion, BlackRock raised $300 million in large debts. According to people familiar with the discussion, fund managers have been urging Jawbone to sell the company. Blackrock Group declined to comment.
Another reorganization is underway as Jawbone deviates its commercial positioning from products that originally focused on the “lifestyle†of consumers. Jawbone is developing wearable devices for health testing and will be approved by the Federal Drug Administration, which will allow it to sell in the US health care system or enable consumers to recover costs from insurance companies.
In 1999, Hosain Rahman and Alexander Asseily founded Aliph, the leading brand of Bluetooth headsets for mobile phones. After releasing the popular Jambox wireless speaker, it released UP in 2011 to enter the wearable device for health tracking. One of the most important devices recently released is the heart rate tracker UP3, which went on sale in 2015 but did not receive a large number of followers.
As some analysts question whether mainstream consumers can think of wearing a small computer on their wrists, a low-priced acquisition or the bankruptcy of the company will mark the recent failure of the wearable device market.
As the market leader in fitness tracking, Fitbit has been sweeping the small players and losers in the industry. It snapped up the assets of smart watch pioneer Pebble in a cheap deal late last year, and earlier this week it acquired some of the assets of European companies behind Vector Smart Watch.
Fitbit said, "Like our recently announced acquisition of Pebble assets, Vector brings us valuable industry expertise that will help accelerate the development of new products, features and new features."
Just before Christmas, Fitbit retracted its complaint against Jawbone at the US International Trade Commission, which had imposed import quotas on its rival UP products on the grounds of patent infringement.
In its offer to the International Trade Commission to revoke the case, Fitbit stated that Jawbone no longer sells any of its wearable activity tracking devices, as well as any of its other products. Media reports and other public documents indicate that the demise of Jawbone products has raised real questions about Jawbone's ability to continue to operate.
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