Fitbit Inc, a San-Francisco-based tech firm that produces wearable gadgets, saw its shares gain as much as 10 percent after a little known private equity firm said it had approached the company with a buyout offer. The shares then gave up some of those gains after Fitbit said they had not been in talks with anyone concerning a sale.
The purported buyers, ABM Capital Ltd, issued a statement on Wednesday saying that their offer had been received by the SEC offices; however a spokesman for Fitbit denied any knowledge of the offer from ABM or anyone else.
Details of the filing are sketchy, but Reuters were able to determine that ABM wanted to purchase Fitbit for $12.60 per share. ABM was not reachable using the telephone number on the case sheet.
“This offer looks suspicious and we are definitely taking it with a pinch of salt,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International. “The legitimacy of a company has to be called into question when they make spelling mistakes on a filing and their offices can’t be reached by phone.”
According to the U.S. Securities and Exchange Commission (SEC) they received the filing early Tuesday morning but did not comment on the veracity of ABM other than to say they had not received any previous filings from the Beijing-based company.
The SEC has a publicly accessible database called Edgar where thousands of fund managers and public companies make filings. Sector watchdogs have been worried about the security of the database after a previously unknown company called PTG Capital Partners offered to purchase cosmetics giant Avon Products Inc for $4 billion last year.
Fitbit shares rose as much as 10 percent in the morning session as news broke of the offer but sank back down to only $8.89 per share, well below the offer price of $12.60, which would have represented a 47 percent premium.
Fitbit’s performance has been slumping this year, losing 65 percent of their $2 billion valuation amid rising competition from international manufacturers.
Executives of Fitbit declined to comment on the recent developments, but a statement last month said the company are bringing in new initiatives to increase revenue.
