Alexa! Start my Roomba: Amazon buys a robot vacuum cleaner for 1.7 billion dollars

Aug 5 (Reuters) – Inc (AMZN.O) is to acquire iRobot Corp (IRBT.O), maker of the Roomba robotic vacuum cleaner, in a cash deal worth around $1.7 billion. dollars in the world’s largest online retailer’s latest push to expand its stable of smart home devices.

Amazon will pay $61 per share, valuing iRobot at a 22% premium to the stock’s last closing price of $49.99.

iRobot’s stock rose 19% on Friday to $59.66. At its peak during the pandemic shutdowns, iRobot’s stock was more than double that price as hygiene-conscious consumers invested in high-end vacuums.

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The acquisition follows a vision Amazon outlined in 2021. Amazon senior vice president Dave Limp told reporters, “In five to 10 years, we believe every home will have at least one robot which will become a central part of your daily life.”

iRobot CEO Colin Angle also said homes should have a myriad of devices that communicate seamlessly with each other and one day address social challenges such as elderly care.

Amazon already has its virtual assistant Alexa; Ring, which he acquired to strengthen the security of his home; and a smart thermostat, giving it a range of products in the “Internet of Things” category, said Ethan Glass, an antitrust expert at law firm Cooley LLP.

Glass said the US Federal Trade Commission, which is already investigating Amazon, would likely review the transaction.

“I would say there’s a three in four chance of a thorough investigation and a one in four chance of a challenge,” Glass said. “Politicians have made it clear that they would rather go to court and lose than let a deal go through that will then be criticized as anti-competitive, especially as they seek to change the laws.”

Amazon said it would continue to provide iRobot products to other retailers and keep them compatible with voice assistants from other companies.

The devices represent a fraction of overall Amazon sales. He recently launched a dog-like robot called Astro.

In addition to sweeping up dirt, Roomba vacuums, which cost up to $1,000, collect household spatial data that could prove valuable to companies developing smart home technology.

iRobot’s fortunes took a hit as consumers began to rethink how they spend their money amid rising inflation. Its second-quarter revenue fell 30% due to weak demand from retailers in North America and Europe, the Middle East and Africa.

The acquisition comes at a time when analysts expect cash-rich technology companies to embark on a merger and acquisition spree to take advantage of low 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 . Read more

“It looks like (CEO) Andy Jassy is going to employ more mergers and acquisitions than (predecessor) Jeff Bezos and that makes more sense to me now that Amazon is bigger and has more money,” said Thomas Forte, DA Davidson analyst.

If the deal fails, Amazon will have to pay iRobot a $94 million termination fee. Once the deal is done, Angle would remain as iRobot’s CEO.

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Reporting by Akash Sriram and Nivedita Balu in Bengaluru; Additional reporting by Diane Bartz in Washington and Jeffrey Dastin in Palo Alto, Calif.; Editing by Arun Koyyur, Mark Potter and Will Dunham

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