Google buys connected home firm Nest for $3.2 billion

The biggest shocker of this month came in today with the announcement that Google has bought Nest for a whopping $3.2 billion. Nest is a startup that employs around 300 people, they make a WiFi thermostat and an intelligent smoke + CO alarm. Under Google, Nest will continue to be Nest and will focus on helping people save more energy and keeping them safe in their homes.

Nest is Google's third largest purchase to date, trailing only Motorola Mobility and ad firm DoubleClick. The takeover sum seems very hefty for such a small company when you consider that much larger tech firms are valued at the same price or even lower. Beaten-down chip maker AMD for instance currently has a market cap of $2.99 billion.

Google said yesterday that it’s buying Nest Labs Inc., the digital thermostat maker led by Tony Fadell, a former Apple senior vice president, for $3.2 billion in cash. Fadell, 44, worked closely with Apple co-founder Steve Jobs in helping create the iPod and iPhone.

...

Fadell said in a blog post yesterday that conversations with Google started in 2011, when he showed co-founder Sergey Brin an early model of the prototype. That year, Google’s venture arm invested in Nest, following earlier financing from Kleiner Perkins Caufield & Byers and Shasta Ventures.

Source: Bloomberg