Amazon Sweeps Up Roomba Maker iRobot for $1.7 Billion

The e-commerce giant is broadening its portfolio of smart home devices Read More...

Expanding its presence in consumer robotics, Amazon.com Inc. (NASDAQ:AMZN) announced on Friday it is buying iRobot Corp. (NASDAQ:IRBT) for $1.7 billion.

According to the terms of the all-cash deal that includes debt, the Seattle-based e-commerce giant will pay $61 per share for the maker of Roomba vacuum cleaners.

Founded in 1990 by Massachusetts Institute of Technology robotics, iRobot first introduced the Roomba in 2002. Since then, the Bedford, Massachusetts-based company has developed other robotic products, like mops and pool cleaners, as well as air purifiers.

In a statement, Dave Limp, senior vice president of Amazon Devices, praised iRobots innovation in helping consumers save precious time.

Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventivefrom cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin, he said. Customers love iRobot productsand Im excited to work with the iRobot team to invent in ways that make customers lives easier and more enjoyable.

The line of autonomous cleaning products will be added into Amazons portfolio of other smart home devices, which include Ring doorbells and security cameras as well as voice-activated thermometers and microwaves. Last year, the company also unveiled its ambitious Astro home monitoring robot, a $1,500 device that is equipped with the Alexa digital assistant and can navigate around houses.

The iRobot deal marks Amazons fourth-largest acquisition, behind its $13.7 billion purchase of Whole Foods in 2017, its $8.45 billion transaction with film studio MGM last year and its $3.9 billion takeover of primary care provider One Medical, which was announced last month.

After becoming a pandemic darling in 2020 and 2021 as consumers spent more time at home, iRobot has suffered in recent quarters from supply chain constraints and lower demand. It reported on Friday morning that second-quarter revenue of $255.4 million was down from the prior-year period as a result of unanticipated order reductions, delays and cancellations from retailers. This was short of the $303 million Refinitiv analysts were anticipating.

IRobots adjusted loss widened to 35 cents per share from 27 cents a year ago, but was better than the $1.55 loss analysts were expecting.

As part of a restructuring to offset rising costs and declining revenue, iRobot also revealed it will cut about 140 employees, or 10% of its workforce.

Colin Angle, the chairman and CEO of iRobot, expressed his enthusiasm for the deal with Amazon in a press release, saying it will further the companys mission to create innovative, practical products that make customers lives easier.

Amazon shares our passion for building thoughtful innovations that empower people to do more at home, and I cannot think of a better place for our team to continue our mission, he said. Im hugely excited to be a part of Amazon and to see what we can build together for customers in the years ahead.

Following the close of the deal, Angle will remain as iRobots CEO.

Shares of iRobot were up nearly 20% at $59.48 after the announcement, while Amazons shares declined around 2% to $139.99.

Year to date, Amazons stock has tumbled more than 15%, while iRobots stock has fallen about 10%.

Current guru shareholders of iRobot that will benefit from the acquisition include PRIMECAP Management (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Jim Simons (Trades, Portfolio) Renaissance Technologies, Ray Dalio (Trades, Portfolio), John Hussman (Trades, Portfolio), Prem Watsa (Trades, Portfolio), Caxton Associates (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).

This article first appeared on GuruFocus.

Read More

Add Comment

Click here to post a comment