Amazon acquires Roomba maker iRobot for $1.7bn

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

In the all-cash deal, Amazon said it will pay iRobot shareholders $61 per share, a 22 per cent increase on its closing price on Thursday. The acquisition adds to the US tech conglomerate’s selection of other products for the home, such as its Alexa smart speaker and Ring doorbell.

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

On completion of the deal, Colin Angle will remain the chief executive of iRobot.

“We know that saving time matters, and chores take precious time that can be better spent doing something that customers love,” said Dave Limp, senior vice-president of Amazon Devices.

The Massachusetts-based company is the latest billion-dollar-plus deal by 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 agreed a $3.9bn deal for One Medical, a company that offers subscriptions for access to doctors, to add to its online healthcare offerings.

Amazon is only allowed to make these kinds of acquisitions as any deal to buy a direct rival would nearly certainly be blocked by antitrust regulators. But regulators are expected to take a close look at its recent transactions.

Lina Khan, chair 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 large tech groups such as Amazon.

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

In results released on Friday, iRobot said its quarterly sales fell 30 per cent from the same time last year to $255mn. It also reported a $63mn quarterly operating loss, far higher than the $3mn it lost over the same period last year.

Those widening losses and a sharp build-up in inventories caused iRobot’s cash and cash equivalents to drop from $201mn at the start of the year to just $63.4mn at the end of the second quarter. The figures indicate the company was facing significant financial pressure stemming from broader supply chain disruptions that have hit the technology industry.

iRobot announced a cost reduction plan that includes the lay-off of 10 per cent of its workforce.

Amazon is in a tussle with the European Commission over the placement of its own-brand products on its platform.

Antitrust regulators suggested Amazon was using its size, power and data to prioritise its own items over competing merchants on its ecommerce platform. The commission is seeking views by September 9 on concessions offered by the tech company that aim to address the issues raised.