The watchmaker group, which includes brands such as Diesel, Armani and Skagen, saw its shares jump around 8% following the announcement.
Google will pay $40mn for “intellectual property (IP) related to smartwatch technology currently under development by Fossil Group” and as part of the transaction, a number of Fossil Group’s research and development (R&D) team will also join Google, according to the statement.
As a result, Google will now have a dedicated team who can work internally on WearOS — a version of Google’s Android operating system designed for smartwatches and other wearables.
“Wearables, built for wellness, simplicity, personalisation and helpfulness, have the opportunity to improve lives by bringing users the information and insights they need quickly, at a glance,” said Stacey Burr, the president of product management for Google’s WearOS platform.
“The addition of Fossil Group’s technology and team to Google demonstrates our commitment to the wearables industry by enabling a diverse portfolio of smartwatches and supporting the ever-evolving needs of the vitality-seeking, on-the-go consumer.”
US-headquartered Fossil Group said it will retain more than 200 R&D team members so that it can continue to zero in on innovation and product development.
According to a report from Wareable, Greg McKelvey, EVP and chief strategy and digital officer of the Fossil Group, said that the deal will result in the launch of a “new product innovation that’s not yet hit the market”.
The new product is reportedly built on a technology that Fossil Group gained when it acquired wearable maker Misfit for $260mn back in 2015.
In a statement, McKelvey added: “Fossil Group has experienced significant success in its wearables business by focusing on product design and development informed by our strong understanding of consumers' needs and style preferences.
“We've built and advanced a technology that has the potential to improve upon our existing platform of smartwatches.
“Together with Google, our innovation partner, we'll continue to unlock growth in wearables.”
The transaction is expected to close in January.