Amazon acquires Roomba maker iRobot in a .7 billion deal

Amazon acquires Roomba maker iRobot in a $1.7 billion deal

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Amazon devices listen, watch, and will soon clean up after you.

The e-commerce giant will acquire iRobot — best known for its Roomba robot vacuum cleaner — in a $1.7 billion all-cash deal, the latest step in its home-making journey. From fitness wearables to streaming devices to its digital assistant Alexa, Amazon has advanced a range of devices in an ecosystem that binds consumers more closely to the company and its services. Last year it introduced Astro, a $1,000-plus robot designed to move small objects around and keep its cameras open for intruders.

The deal, announced on Friday, is also a continuation of Amazon’s business strategy of expanding market share in various product categories through acquisitions. It snapped up Ring, which makes video doorbells and other smart home tech, in February 2018, and before that Blink, which makes connected cameras and doorbells for the home. It also surprised the food industry in 2017 when it announced the purchase of Whole Foods Market, a $13.7 billion deal.

(Amazon founder Jeff Bezos owns the Washington Post.)

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The move comes just two weeks after Amazon announced it would buy primary care provider One Medical for $3.9 billion, as part of a significant expansion of the tech company’s healthcare ambitions. The merger, one of its biggest acquisitions of all time, gives Amazon a physical network of healthcare offices and providers and strengthens its existing healthcare portfolio, which includes an online pharmacy and Amazon Care, a virtual and home emergency care service.

Amazon’s offer of $61 per share represents a 22 percent premium to Thursday’s close of $49.99. On Friday, iRobot stock rose almost 19.1 percent to close at $59.54.

“We know it’s important to save time, and chores take up valuable time that could be better spent doing something customers love,” said Dave Limp, senior vice president of Amazon Devices. “Over many years, the iRobot team has proven their ability to reinvent the way people clean with incredibly practical and inventive products.”

Founded in 1990 by roboticists at the Massachusetts Institute of Technology, iRobot offers a range of automatic vacuum cleaners and floor mops, as well as air cleaners and handheld vacuums. His signature Roomba, which retails for up to $1,000, learns the contours and corners of floors and can recognize objects, offers connectivity to WiFi networks and smartphones, and can be summoned by voice-activated smart home devices. The company was traded on the Nasdaq in 2005.

Despite being a top name in home robotics, iRobot has had a tough year. On Friday, it reported revenue of $255.4 million for the second quarter, down 30 percent from the same period last year. It reported a net loss of $43.4 million for the three-month period ended July 2.

The company also plans to move certain non-core engineering functions to lower-cost regions as part of a cost-cutting plan and to lay off 10 percent of its workforce, about 140 people, according to the earnings report.

The company has withdrawn the 2022 financial guidance it released in May and suspended all other guidance on future performance, citing “continued disruptions and uncertainties that could affect the company’s prospects”.

iRobot’s products, which depict the floorplans of its customers’ most intimate spaces, will expand Amazon’s range of products that work by monitoring the home and the people in it.

What started as a microphone in a speaker has evolved into a growing genre of devices designed to make home life more comfortable. Last September, at the company’s annual fall press event, Amazon unveiled a 15-inch wall-mounted version of its Echo Show screen that watches and hears your home, along with a range of other products and services, all monitoring consumers in some way anticipate their needs .

The growth of this technology underscores consumers’ increasing tolerance of sensors and cameras that are trained to fit into their daily routines. This development has been criticized by privacy advocates and concerned consumers. It also underscores how tech giants view the home as yet another platform for a range of services and a goldmine of personal data.

Amazon will assume iRobot’s net debt under the terms of the deal, which requires approval from regulators and the robot maker’s shareholders. Colin Angle remains Chief Executive of iRobot.

Amazon shares fell 1.2 percent on Friday to close at $140.80, the $1.4 trillion market value.

Last week, the Seattle-based giant reported its second straight quarterly loss — of $2.03 billion, or 20 cents a share — on a $3.9 billion writedown related to its investment in electric vehicle startup Rivian Automotive, the Associated Press reported. But Amazon also reported better-than-expected sales of $121.2 billion in the second quarter.

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