On Friday, Aug. 5, Amazon announced that it acquired iRobot, the company behind Roomba vacuum, for $1.7 billion. The e-commerce giant bought the tech company for $61 a share in an all-cash deal.
Amazon Buys iRobot
According to CNBC, the new deal between Amazon and iRobot will deepen the e-commerce giant's presence in consumer robotics, and it will give Roomba a chance to be included in Amazon's list of tech products.
The e-commerce company made a bold bet on the market in 2021 when it unveiled the Astro home robot for $1,500. The robot is equipped with the digital assistant Alexa and follows consumers around their homes.
The company also launched several smart home devices, such as Ring doorbells, voice-activated thermometers, and voice-activated microwaves, according to The Verge.
Dave Limp, Amazon's hardware devices chief, said in a statement that the iRobot team had proven its ability to reinvent how people clean with practical and inventive products, from cleaning when and where customers want while effectively avoiding common obstacles to emptying the collection bin.
Limp added that "customers love iRobot products" and that Amazon is excited to work with the iRobot team to invent ways that make customer lives easier and more enjoyable.
The acquisition of iRobot marks Amazon's fourth-largest deal after its $13.7 billion purchase of Whole Foods in 2017, its $8.45 billion purchase of MGM in 2021, and its $3.9 billion acquisition of One Medical in July.
iRobot's Decline in Revenue
iRobot was founded back in 1990 by the Massachusetts Institute of Technology or MIT roboticists. It is best known for making the Roomba vacuum, a robotic device that was launched in 2002 that can clean the customer's floors autonomously.
The tech company has also introduced robotic mops and pool cleaners, and it also has a subscription program that offers automatic equipment replenishment.
Amazon's purchase of iRobot came at a time when the tech company was facing financial issues.
iRobot reported its second-quarter results on Friday, Aug. 5, and it showed a 30% annual decline in revenue, mainly because of unanticipated order reductions, delays, and cancellations from retailers in North America, Europe, Africa, and the Middle East.
In 2020 and 2021, iRobot benefited from the effects of the pandemic because consumers spent more time at home and bought robot vacuums to keep their homes clean.
The business has suffered from supply chain constraints in the past few months. iRobot said that it now has a glut of inventory despite declining orders from retailers.
The revenue for the second quarter came in at $255.4 million, which is short of the $303 million expected by analysts surveyed by Refinitiv. The losses widened to 35 cents per share, and analysts surveyed by Refinitiv had expected a loss of $1.55 per share.
iRobot said that it would cut about 140 employees or 10% of its workforce as it faces falling revenue and rising costs, according to Boston Globe.
The company CEO Colin Angle will continue to run the tech company after the acquisition is finalized.
The shares of iRobot increased more than 19% in early trading after they were paused after the announcement of the deal. Meanwhile, Amazon's stock decreased 1%.
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Written by Sophie Webster
