Entertainment · August 6, 2022

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

Amazon.com Inc will acquire iRobot Corp, maker of the robot vacuum cleaner Roomba, in an all-cash deal for about $1.7 billion, marking the world’s largest online retailer’s latest foray into its range of smart homes devices to expand.

Amazon is paying $61 per share and valuing iRobot at a 22% premium to the stock’s last close of $49.99.

iRobot’s stock rose 19% to $59.66 in Friday trade. At its peak during the COVID-19 pandemic, iRobot’s stock more than doubled as hygiene-conscious consumers invested in premium vacuums.

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

Colin Angle, iRobot’s chief executive, also said that households should have countless devices that communicate seamlessly with each other and one day address social challenges like caring for the elderly.

Amazon’s device division accounts for just a fraction of the company’s revenue, but the e-commerce giant has steadily expanded its offering with more speakers showcasing its Alexa voice assistant, as well as Ring home security doorbells and cameras, which it acquired in 2018 Has.

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Ethan Glass, antitrust expert at law firm Cooley LLP, said the US Trade Commission is likely to review the transaction.

“I’d say there’s a three-in-four chance of a thorough investigation and a one-in-four chance of a challenge,” he said. “Politicians have made it clear that they would rather go to court and lose than go through with a deal later criticized as anti-competitive.”

Amazon said it will continue to ship iRobot products to other retailers and keep them compatible with other companies’ voice assistants.

In addition to sweeping up dirt, Roomba vacuums, which cost up to $1,000, collect spatial data about homes that could prove valuable for future smart home technology. One critic, Ron Knox of the Institute for Local Self-Reliance, called the deal a “privacy nightmare” on Twitter because it would expand the personal home information in the retailer’s arsenal.

Amazon has said it protects customers’ privacy and will not sell their data. Among the information gathered, a consumer found https://www.reuters.com/investigates/special-report/amazon-privacy-lobbying/#sidebar, a record of everything he searched on Amazon, as well as more than 1,000 contacts from his telephone and what part of the Koran he heard.

iRobot’s fortunes took a hit as consumers began to reconsider their purchases in the face of rising inflation. Second-quarter sales 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 well-funded tech companies to embark on an M&A spree to take advantage of depressed 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.

“It looks like (CEO) Andy Jassy is using M&A more often than (predecessor) Jeff Bezos, and it makes more sense to me now that Amazon is bigger and has more cash,” said DA Davidson analyst Thomas Forte .

Should the deal fall through, Amazon would have to pay iRobot a $94 million termination fee. Angle would remain CEO of iRobot after the transaction closed.

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