Amazon to buy Roomba vacuum maker iRobot for $1.65bn in expansion push

The acquisition offer by the e-commerce company is part of its strategy to expand into internet-connected device market

An iRobot Terra lawn mower.  Amazon has entered into an agreement to acquire the iRobot for approximately $1.66 billion. AP
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Amazon said it would buy iRobot Corp — maker of the Roomba vacuum — for $1.65 billion, as the e-commerce giant continues its push into internet-connected home devices and robotics.

Amazon will pay $61 a share in cash for the Bedford, Massachusetts-based company, it said.

The offer, valued at $1.7bn including debt, represents a premium of 22 per cent based on iRobot’s last closing price before the announcement. Colin Angle will remain as chief executive of iRobot.

This deal arrives just two weeks after Amazon said it was buying up a chain of doctor’s offices. It suggests the company is forging ahead with acquisitions, despite growing scrutiny of Amazon’s market power from antitrust regulators in the US and Europe.

Seattle-based Amazon has come a long way as a hardware player since a failed foray into smartphones a few years ago. It has worked diligently to place the Alexa voice software and Echo smart speakers at the centre of the burgeoning market for smart-home gadgets.

Spoken Alexa commands can already control many other devices, from smart ovens to light bulbs and Roomba vacuums. The partnership between Amazon and iRobot extended beyond devices, too: iRobot runs some of its software on Amazon Web Services servers.

Buying iRobot will give Amazon a household name in home cleaning gadgets that may give it a leg up over its own designs.

Last autumn, Amazon debuted a household robot that was supposed to usher in — or at least point to — a Jetsons-like future. Called the Astro, the three-wheeled device would eventually sell for about $1,450. But Astro, still in a limited rollout, hasn’t made a splash with consumers.

Over the pandemic, iRobot saw sales increase, as families who were housebound sought shortcuts to keep their homes clean. But like many pandemic-era darlings, iRobot has seen demand wane.

It reported second-quarter revenue of $255.4 million on Friday, short of analysts’ expectations for $301m. The company has also been battling JS Global Lifestyle in a patent infringement case against its SharkNinja vacuums and hybrid vacuum-moppers.

Amazon shares were little changed on Friday in New York. Shares in iRobot, which were down 24 per cent this year through to Thursday, surged almost 20 per cent.

Amazon prefers to develop new technology internally, but its devices unit has been quick in recent years to pull the trigger on acquisitions that give the company a stake in a hot or adjacent market. Amazon grabbed a leading position in video doorbells with its 2018 deal to buy Ring and acquired Wi-Fi hub maker Eero the next year.

“I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable,” said Dave Limp, senior vice president of Amazon Devices.

Some close watchers of the company have speculated that antitrust scrutiny might nudge Amazon chief executive Andy Jassy to take a pause on large deals.

Buying iRobot will be the fourth-largest acquisition by Amazon, ranking behind its acquisition of Whole Foods for $13.7bn in 2017, the $8.5bn purchase of movie studio MGM in March and last month’s agreement to buy 1Life Healthcare for $3.49bn.

The string of deals suggests the company seems to be doing business as usual.

The US government is heightening scrutiny of deals by technology giants. The Federal Trade Commission has been looking at Amazon since 2019 over antitrust concerns with its retail business and cloud computing services. Lina Khan, who became chair of the agency last year, had made a name for herself with a groundbreaking legal paper into Amazon’s potential antitrust violations and has taken a personal interest in the probe.

The FTC is ramping up that investigation under Ms Khan, shaking up the investigative team, re-interviewing potential witnesses and asking about Amazon’s recent acquisition of MGM Studios, Bloomberg has reported.

Seeking to assuage concerns that Amazon would use the deal to muscle out iRobot rivals, an Amazon official said on Friday that the company would continue to supply retailers with iRobot products and sell competing devices on Amazon’s retail websites.

The official also said Amazon had no plans to cut off other voice assistants from iRobot’s line of products.

Updated: August 06, 2022, 5:00 AM
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