Amazon buys robot vacuum maker Roomba for $1.7 billion

Amazon has agreed to buy iRobot, the company best known for its Roomba robot vacuum, for $1.7 billion as the e-commerce group expands its portfolio of home electronics and personal services.

In the all-cash deal, Amazon said it would pay iRobot shareholders $61 a share, up 22% from its closing price on Thursday. The acquisition increases the US tech conglomerate’s selection of home appliances, such as the Alexa smart speaker and Ring doorbell.

iRobot’s Roomba is one of the best-selling robot vacuums on Amazon. Devices are trained to avoid walls, cables and pet waste, a common complaint among users of previous Roomba models.

Upon completion of the deal, Colin Angle will continue to be iRobot’s chief executive.

“We know that saving time is important, and household chores require precious time that can be better spent on something customers enjoy,” said Dave Limp, senior vice president, Amazon Devices.

The Massachusetts-based company is the latest more than $1 billion deal for Amazon, which has been making a series of so-called vertical acquisitions to broaden its access to products and services to sell on its platforms.

Amazon recently struck a $3.9 billion deal for One Medical, a company that offers subscriptions for physician access, to add to its online health care offerings.

Amazon is only allowed to make this type of acquisition, as any deal to buy a direct competitor would almost certainly be blocked by antitrust regulators. But regulators are expected to take a close look at their recent transactions.

Lina Khan, chairman of the Federal Trade Commission, and Jonathan Kanter, head of antitrust at the US Department of Justice, have repeatedly stressed the importance of reining in the market power of big tech groups like Amazon.

The deal comes after iRobot reported a sharp downturn in its business, which is driving a financial restructuring of its operations to conserve resources.

In results released on Friday (5), iRobot said its quarterly sales were down 30% from the same period last year, to $255 million. The company also reported a quarterly operating loss of US$63 million (R$328.2 million), much higher than the US$3 million lost in the same period last year.

These mounting losses and a sharp rise in inventories caused iRobot’s cash and cash equivalents to drop from $201 million at the start of the year to just $63.4 million. million) at the end of the second quarter. The numbers indicate that the company was facing significant financial pressure stemming from broader supply chain disruptions that hit the technology sector.

iRobot announced a cost reduction plan that includes laying off 10% of its workforce.

Amazon is in dispute with the European Commission over the placement of its private label products on its platform.

Antitrust regulators suggested that Amazon was using its size, power and data to prioritize its articles over competing merchants on its e-commerce platform. The commission is now seeking opinions through Sept. 9 on concessions offered by the technology company to address the issues raised.

Translated by Luiz Roberto M. Gonçalves