Amazon will acquire iRobot Corp, maker of the robotic vacuum cleaner Roomba, in a cash deal worth about $1.7 billion in the latest push by the world’s largest online retailer for its steady expansion of smart home devices.
Amazon will pay $61 per share, valuing iRobot at a premium of 22% to the stock’s final closing price of $49.99.
Shares of iRobot rose 19% to $59.66 in Friday trading. At its peak during the COVID-19 pandemic lockdown, iRobot shares were more than double the price that hygiene-conscious consumers had invested in premium vacuum cleaners.
The acquisition follows through on a vision that Amazon outlined in 2021. Amazon Senior Vice President Dave Limp told reporters, “In five to 10 years, we believe every home will have at least one robot that will become a core part of your everyday life.”
iRobot Chief Executive Colin Angle said homes should have various devices that seamlessly communicate with each other and one day address social challenges such as eldercare.
Amazon’s device unit only makes up a fraction of company revenue. Still, the e-commerce giant has steadily expanded its lineup with more speakers showcasing its Alexa voice assistant and home security doorbells and cameras from Ring, which it acquired in 2018.
Ethan Glass, an antitrust expert with Cooley LLP law firm, said the U.S. Federal Trade Commission would likely review the transaction.
“I would say there is a three out of four chance of a deep investigation and a one out of four chance of a challenge,” he said. “The political appointees have made clear that they would rather go to court and lose than let a deal through that later is criticized as anti-competitive.”
Amazon said it would continue to supply iRobot products to other retailers and keep them compatible with other companies’ voice assistants.
Besides sweeping up dirt, Roomba vacuums, costing as much as $1,000, collect spatial data on households that could prove valuable to 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 safeguards customers’ privacy and does not sell their data. One consumer found that the information it collects was records of everything he searched on Amazon, 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 started rethinking their purchases amid rising inflation. Its second-quarter revenue fell 30% on weak demand from retailers in North America, Europe, the Middle East, and Africa.
