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The Deal: Google Pays $3.2B for Nest Labs

NEW YORK (The Deal) -- The company that wants to be everything to every user in search and mapping technologies, Google (GOOG), now wants to be right in its users' homes.

Mountain View, Calif.-based Google will spend $3.2 billion to acquire Nest Labs, a home monitoring device company, it said in a statement Monday afternoon.

Palo Alto, Calif.-based Nest Labs is led by Tony Fadell, the same person who, at Apple (AAPL), was responsible for developing its iPod music product.

Fadell will continue to lead Nest Labs within Google after the deal closes, which is expected to be in the next few months, the buyer said.

Though the $3.2 billion megabuy of an Apple acolyte's company might seem counterintuitive, Google had been an early investor with Nest Labs, beginning with the company's B round in 2011. From 2010 through the present day, according to venture capital investment monitoring site CrunchBase, the company raised a total of $230 million.

Nest advertises itself as the creator of the Learning Thermostat, a home monitoring app that learns from its owner's temperature control adjustments. The company also makes smoke and carbon monoxide alarms.

While the deal may seem far afield for Google, it is already invested in technologies that are a departure from its initial goal to own all the searches in the known Internet.

The company already is one, if not the premier, developer of wind energy. Besides running its own wind farm developments in multiple U.S. states, the company established a wind energy agreement with O2 plc, a developer of wind farms across Sweden and elsewhere.

In May, Google bought Makani Power, a California-based company that generates wind energy not through turbines but by using robot-powered kites that transfer electricity into storage.

Google and Nest Labs were not available to comment further on the transaction.

Home monitoring has gained traction with consumers as technological advents have made it simpler and easier to manage from a smartphone or desktop. However, there are a number of competitors in Nest's space.

This includes Canary, a crowdfunded startup billing itself as a "smart home security device," that also tracks temperature and humidity and can track motion and record video as a security feature.

There have also been a number of big deals on the home security front recently.

Ascent Capital Group's security subsidiary Monitronics International bought Security Networks in a deal worth about $508 million in July.

And private equity firm Blackstone Group bought Vivint , the Utah-based home security, solar panel installation and monitoring company, in a $2 billion deal in September 2012. Paul Haigney and John Gnuse of Lazard advised Google.


Written by Jonathan Marino.

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