Google to acquire Nest Labs, maker of smart devices

Google is set to acquire Nest Labs, a maker of smart thermostats and smoke alarms, for $3.2 billion, in a bid to enter a new segment - home automation devices - by acquiring top level hardware design expertise.

Nest, was co-founded by one of the creators of Apple's iconic iPod music player, and will continue operations as a distinct brand after the all-cash deal closes, Google said.

The deal is the second-largest in the history of the internet search company, after its acquisition of mobile phone maker Motorola for  $12.5 billion.

Reutuers quoted Shyam Patil, an analyst at Wedbush as saying Nest Labs appeared to be focused on thermostats and smoke alarms, but it was not far-fetched to see Google expand the technology to other devices.

He added, home automation was one of the bigger opportunities when one talked about the internet of everything and connecting everything. He said the acquisition furthered their strategy around that.

Google shares rose 0.5 per cent at $1,128.49 in extended trading on Monday.

Google said Nest's operations would continue under the leadership of chief executive officer Tony Fadell - a former Apple executive who is referred to as the "godfather" of the iPod, with its own distinct brand identity.

Fadell wrote on a blog on the company's website: ''This is a momentous day for me, for Matt and for all of the Nest family. This afternoon, we announced that we will be acquired by Google.''

''When Matt and I started Nest in 2010, we were determined to change our homes and the world around us. Starting a business focused on the lowly thermostat seemed like a crazy idea at the time, but it made all the sense in the world to us. That little device that went unnoticed and unchanged year after year on the walls of our homes was a lost opportunity to save energy and money. We knew we could do better.''

''So we got to work. From the beginning, our vision was to create a conscious home. A home that is more thoughtful, intuitive – and nice to look at. No one had cracked the code and we were confident we could do it with the right product, the right team, and focus.''

''Fast-forward to today, and we are well on our way to achieving what we set out to do. Our products are loved by customers, best-sellers across major retailers and installed in homes around the world. We have partnerships with some of the largest energy companies in the country to help people save energy and money. We have a huge team of 25,000+ certified professionals who help install Nest in the US and Canada and our company has more than 300 employees spread across three countries.''