Amazon reached an agreement on Friday with iRobot, the makers of the Roomba, to acquire the firm for $1.7 billion. This broadens its portfolio of home technology, but could attract the attention of regulators according to Cristina Criddle, James Fontanella-Khan and Antoine Gara in the Financial Times.
In the all-cash deal, Amazon said it will pay iRobot shareholders $61 per share, a 22% increase from its closing price on Thursday. The acquisition adds to the US tech conglomerate’s selection of other home products, such as its Alexa smart speaker and Ring doorbell.
iRobot’s Roomba is one of Amazon’s best-selling robotic vacuums. The devices are trained to avoid walls, wires, and pet debris, a common complaint among users of previous Roomba models.
After the deal is finalized, Colin Angle will remain iRobot’s CEO.
“We know that saving time is important, and tasks take up precious time that can be better spent doing something customers love,” said Dave Limp, senior vice president of Amazon Devices.
The Massachusetts-based company is the latest $1 billion-plus deal from Amazon, which has been making a series of so-called vertical acquisitions to expand its access to products and services to sell on its platforms.
Other acquisition agreements
Amazon recently agreed to a $3.9 billion deal for One Medical, a company that offers subscriptions to access doctors, to add to its online healthcare offerings.
Amazon can only make these kinds of acquisitions, as any deal to buy a direct rival would almost certainly be blocked by antitrust regulators. But regulators are expected to keep a close eye on his recent transactions.
Lina Khan, chairwoman of the Federal Trade Commission, and Jonathan Kanter, antitrust chief at the US Department of Justice, have repeatedly stressed the importance of reining in the market power of big tech groups like Amazon.
How have iRobot’s latest results been?
The deal comes as iRobot reported a sharp slowdown in its business, which is prompting a financial restructuring of its operations to conserve resources.
In results released Friday, iRobot said its quarterly sales fell 30% from the same period last year to $255 million. It also reported a quarterly operating loss of $63 million, much higher than the $3 million it lost during the same period last year.
Those mounting losses and a heavy inventory buildup caused iRobot’s cash and cash equivalents to fall from $201 million at the beginning of the year to just $63.4 million at the end of the second quarter. The figures indicate the company was facing significant financial pressure stemming from the broader supply chain disruptions that hit the tech industry.
iRobot announced a cost reduction plan that includes laying off 10% of its workforce.
Antitrust fight in Europe
Amazon is in a fight with the European Commission over the placement of its own-brand products on its platform.
Antitrust regulators suggested that Amazon was using its size, power and data to prioritize its own items over competing merchants on its e-commerce platform. The commission is seeking opinions by September 9 on concessions offered by the tech company that are intended to address the issues raised.
Amazon closed the session on Friday at $140.73, leaving behind the last bearish gap and leaving the 200-period moving average above the last candles. Meanwhile, Ei indicators are mostly bullish.
For its part, iRobot closed the week at $59.52, leaving a large upward gap in its wake, and the 200 moving average has been above this last candle. Meanwhile, the Ei indicators are practically bullish.