Amazon.com Inc. will acquire iRobot Corp, maker of the robotic vacuum cleaner Roomba, in a cash deal worth about $1.7 billion in the latest push by the world’s largest online retailer to expand its workspace of smart-home devices. Amazon will pay $61 per share, valuing iRobot at a premium of 22% to the stock’s final closing price of $49.99. Shares of iRobot rose 19% to $59.66 in Friday trading. At its peak during the COVID-19 pandemic lockdown, iRobot shares were more than double the price that hygiene-conscious consumers had invested in premium vacuum cleaners.
The acquisition follows a vision that Amazon outlined in 2021. Dave Limp, Amazon’s senior vice president, told reporters, “In five to 10 years, we believe every home will have at least one robot that will become a core part of your daily life. ,
iRobot chief executive Colin Angle has likewise said that homes should have myriad devices that communicate seamlessly with each other and one day solve societal challenges like eldercare.
Amazon’s devices unit only makes up a fraction of the company’s revenue, but the e-commerce giant has steadily expanded its line-up with more speakers showcasing its Alexa voice assistant, and home security doorbells and cameras from Ring which he achieved in 2018. ,
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Ethan Glass, an antitrust expert at law firm Cooley LLP, said the US Federal Trade Commission would review the transaction.
“I would say there is a three in four chance of a deeper investigation and a one in four chance of a challenge,” he said. “Political appointees have made it clear that they criticize that deal as anti-competitive afterward, rather than go to court and lose.”
Amazon said it will continue to supply iRobot products to other retailers and keep them compatible with other companies’ voice assistants.
In addition to cleaning up the mess, Roomba vacuums, which cost up to $1,000, collect spatial data on homes that could prove valuable for future smart-home technology. One critic, Ron Knox of the Local Self-Reliance Institute, called the deal a privacy “nightmare” on Twitter because it would expand the personal household information in the retailer’s arsenal.
Amazon has said it protects customers’ privacy and does not sell their data. Among the information it collected was a record of everything a consumer searched for on Amazon, as well as more than 1,000 contacts from his phone and what part of the Quran he listened to.
Consumers began to reconsider their purchases amid rising inflation, affecting iRobot’s fortunes. Its second-quarter revenue declined 30% due to weak demand from retailers in North America and Europe, the Middle East and Africa.
If the deal fails, Amazon will have to pay iRobot a $94 million termination fee. Angle will remain CEO of iRobot upon completion of the deal.
DA Davidson analyst Thomas Forte said, “It looks like (CEO) Andy Jesse is going to hire more M&A than (predecessor) Jeff Bezos and it makes more sense to me now that Amazon is bigger and there’s more.” There’s more cash.”
The acquisition comes at a time when analysts expect cash-rich technology companies to go on an M&A spree to take advantage of lower valuations due to growth pressures. Amazon currently has more than $37 billion in cash and cash-equivalents and last month announced a deal to buy primary care provider One Medical.