Amazon’s cart of connected devices grows with $1.7 billion deal for Roomba maker

Aug 5 (Reuters) – Inc (AMZN.O) will acquire iRobot Corp (IRBT.O), maker of the Roomba robotic vacuum cleaner, in an all-cash deal for about $1.7 billion, in the latest industry push world. largest online retailer to expand its stable of smart home devices.

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

iRobot shares rose 19% in early trading on Friday to $59.56. At its peak during the pandemic lockdowns, iRobot was trading at more than double that price as hygiene-conscious consumers invested in premium vacuums.

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Amazon already owns the Alexa virtual assistant, Ring, which monitors homes and a smart thermostat, giving it a range of products in the “internet of things” category, said Ethan Glass, an antitrust expert at the Cooley law firm. LLP.

He said the US Federal Trade Commission, which is already investigating Amazon, would likely review the transaction.

“I would say there is a three in four chance of a deep investigation and a one in four chance of a challenge,” he said. “Political appointees have made it clear that they would rather go to court and lose than pass up a deal that is later criticized as anti-competitive, especially as they seek to change the laws.”

Charlotte Slaiman of Public Knowledge added that antitrust enforcers now viewed the risk of under-enforcement as a problem rather than just over-enforcement. “The costs of inaction are much higher than antitrust experts used to think,” she said.

In addition to sweeping up dirt, Roomba vacuums, which cost up to $1,000, collect spatial data from homes that could prove valuable to companies developing smart home technology.

But iRobot’s fortunes took a hit as consumers began to reconsider how to spend their money 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 deal comes at a time when analysts expect cash-rich tech companies to embark on a wave of mergers and acquisitions to take advantage of low valuations due to growth pressures. Amazon currently has cash and cash equivalents of more than $37 billion.

The devices make up a fraction of total sales on Amazon, but include smart thermostats, security devices and it recently launched a canine-like robot called Astro.

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

If the deal falls through, Amazon would have to pay iRobot a $94 million cancellation fee. Upon completion of the deal, Colin Angle would remain as CEO of iRobot.

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Reporting by Akash Sriram and Nivedita Balu in Bengaluru Additional reporting by Diane Bartz in Washington Editing by Arun Koyyur and Mark Potter

Our standards: the Thomson Reuters Trust Principles.

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