Amazon’s basket of related units grows with 1.7 billion USD deal for Roomba producer

August 5 (Reuters) – Amazon.com Inc (AMZN.O) will acquire robot vacuum cleaner maker iRobot Corp (IRBT.O) The $1.7 billion all-cash deal is the latest bid by the world’s largest online retailer to expand its portfolio of smart home devices.

Amazon will pay $61 per share, valuing the Roomba maker at a 22% premium to the stock’s last closing price of $49.99.

Its shares rose about 19% at the start. During the pandemic quarantine, iRobot’s price reached $197.4 as hygiene-conscious consumers invested in premium robot vacuums.

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Roomba vacuums, which cost as much as $1,000, collect not only dirt, but also spatial household data that can be valuable to companies developing so-called smart home technology.

But its fortunes have suffered as consumers began to rethink how they spend their money amid rising inflation. Second-quarter revenue fell 30% due to weak demand from retailers in North America and Europe, the Middle East and Africa.

The deal comes at a time when analysts expect cash-rich tech companies to merge and merge to take advantage of low valuations amid growth pressure. Amazon currently has more than $37 billion in cash and cash equivalents.

“We haven’t heard much about Amazon’s smart home strategy lately, and this acquisition puts it back on the agenda,” said Atlantic Equities analyst James Cordwell.

The devices are just a fraction of the overall sales of Amazon, which sells smart thermostats, security devices, a wall-mounted smart display and recently released the dog-like robot Astro.

“(CEO) Andy Jassy seems to be going more M&A than Jeff Bezos, and it makes more sense to me now that Amazon is bigger and has more money,” said Thomas Forte, an analyst at DA Davidson.

If the deal were to end, Amazon would have to pay iRobot $94 million. USD termination fee. After the deal closes, Colin Angle will remain CEO of iRobot.

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Reporting by Akash Sriram and Nivedita Balu from Bengaluru; Edited by Arun Koyyur

Our standards: Thomson Reuters Trust Principles.

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