Amazon will pay $61 per share, valuing iRobot at a 22% premium to the stock’s last closing price of $49.99.
iRobot’s stock rose 19% on Friday to $59.66. At its peak during the COVID-19 pandemic shutdowns, iRobot Shares were more than double that price as hygiene-conscious consumers invested in high-end vacuums.
The acquisition follows a vision that Amazon set out in 2021. Senior Vice President of Amazon Dave Box told reporters, “In five to ten years, we believe that every human will have at least one robot that will become a central part of your daily life.”
General Manager of iRobot Colin Angle Likewise, said men should have a myriad of devices that communicate seamlessly with each other and one day tackle social challenges like caring for the elderly.
Amazon’s device unit accounts for just a fraction of the company’s revenue, but the e-commerce giant has steadily expanded its lineup with more speakers showcasing its voice assistant Alexa and with doorbells and home security cameras from Ring, which he acquired in 2018.
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Ethan Glass, an antitrust expert with the law firm Cooley LLP, said the US Federal Trade Commission would likely review the transaction.
“I would say there’s a three in four chance of a thorough investigation and a one in four chance of a challenge,” he said. “Politicians have made it clear that they would rather go to court and lose than let a deal go through that will then be criticized as anti-competitive.”
Amazon said it would continue to provide iRobot products to other retailers and keep them compatible with voice assistants from other companies.
In addition to sweeping up dirt, Roomba vacuums, which cost up to $1,000, collect household spatial data that could prove useful for future smart home technology. One critic, Ron Knox of the Institute for Local Self-Reliance, on Twitter called the deal a “privacy nightmare” because it would expand personal home information in the retailer’s arsenal.
Amazon said it protects customers’ privacy and does not sell their data. Among the information he collects, a consumer found https://www.Reuters.com/investigates/special-report/amazon-privacy-lobbying/#sidebar, records of everything he searched on Amazon, as well as more than 1,000 contacts from his phone and which part of the Quran he listened to.
iRobot’s fortunes took a hit as consumers began to rethink their purchases amid rising inflation. Its second-quarter revenue fell 30% due to weak demand from retailers in North America and Europe, the Middle East and Africa.
The acquisition comes at a time when analysts expect cash-rich technology companies to embark on a merger and acquisition spree to take advantage of low valuations due to growth pressures. Amazon currently has more than $37 billion in cash and cash equivalents and last month announced a deal to buy primary care provider One Medical.
“It looks like (CEO) Andy Jassy is going to employ more mergers and acquisitions than (predecessor) Jeff Bezos and that makes more sense to me now that Amazon is bigger and has more money,” said Thomas Forte, DA Davidson analyst.
If the deal fails, Amazon will have to pay iRobot a $94 million termination fee. Angle would remain iRobot’s CEO once the deal is completed.