Amazon buys robot vacuum maker Roomba for USD1.7 billion

Amazon to add to its range of smart devices with the acquisition

Amazon buys robot vacuum maker Roomba for USD1.7 billion

Amazon buys robot vacuum maker Roomba for USD1.7 billion

Amazon Inc has announced that it will acquire the maker of robotic vacuum cleaner Roomba, iRobot Corp, in an all-cash deal valued at approximately USD1.7 billion. This marks the latest effort by Amazon, the world’s largest online retailer, to expand its portfolio of smart home devices.

Valuing iRobot’s stock at a premium of of 22 percent, Amazon will pay USD61 per share against the stock’s last closing price of USD49.99.

Last week, iRobot’s stock rose by 19 percent to close at USD59.66 during trading. During the Covid-19 pandemic, shares of the company traded at twice this value, as more hygiene-conscious consumers purchased premium vacuum cleaners.

The latest acquisition by Amazon, is in line with a vision outlined last year, during which Senior Vice President of Amazon stated that within five to ten years, the company believed that every home will have at least one robot that will be a core part of everyday life.

Chief Executive Officer of iRobot, Colin Angle, similarly stated that homes should have a range of smart devices that are able to seamlessly communicate with each other and address potential social challenges like eldercare.

Amazon expanding its range of smart devices

Although the devices division comprises only a fraction of the company’s revenue, Amazon has gradually expanded its portfolio of smart devices with a range of speakers incorporating its voice assistant, Alexa, and the acquisition of Ring in 2018, which manufactures home security doorbells and cameras.

In a statement, Amazon said that it will continue to supply iRobot products to other retailers, and would retain compatibility with voice assistants produced by other companies.

Roomba vacuum cleaners, in addition to cleaning dirt, also collect household spatial data that is valuable to future smart-home technology. The vacuum cleaners cost as much as USD1,000. The deal has faced skepticism from critics, who fear that the online retailer would have access to data from households.

Amazon, for its part, has stated that it safeguards consumer privacy and does not sell their data.

Revenues for iRobot were affected by rising inflation as consumers reevaluated their purchases. Q2 revenue of the company fell by 30 percent on weaker demand from retailers across Europe, North America, and the MENA region.

In the event of the acquisition not going through, Amazon would be required to pay iRobot a termination fee of USD91 million. Colin Angle is slated to remain as CEO of iRobot on completion of the deal.


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