Amazon has placed big bets on iRobot, the maker of the famous and autonomous Roomba vacuum. Amazon will acquire the Massachusetts-based iRobot for more than 1.7 billion USD in cash. This acquisition signals a trend for Amazon; they are increasingly innovative products that can seamlessly interconnect with their other home and consumer robotics, mainly the Alexa.
A multi-billion-dollar bargain?
In total, Amazon is set to pay 61 USD per share, which was 22% above iRobot’s share price when the deal was announced. Since then, shares have gone up by almost 20%, as investors believe that Amazon’s interest in the company will propel it to greater things. Despite Amazon’s takeover, the founder and CEO of iRobot, Colin Angle, will still run the company. Even though 1.7 billion USD seems like a lot, Amazon has cash assets of over 37 billion. This acquisition neither strains their current reserves, nor will it prohibit them from pursuing other acquisitions in the near future. Moreover, iRobot’s share prices were over 120 USD per share just last year, so Amazon is getting the company for a relative bargain.
iRobot was founded in 1990 by three members of MIT’s Artificial Intelligence Lab. Their robotics expertise has led to some great inventions with various applications, but no product of the company has come close to the massive popularity of the vacuuming Roomba. There are quite a few generations of this robot, and the most advanced models cost well over 1,000 USD. But sales have not been at their best as of late. In the first half of 2021, the company had over 669 million USD in sales, but those numbers fell to 547 million in the second half. Importantly, the company experienced operating losses of 87 million USD in 2021, which has resulted from order reductions as the pandemic eased and supply chain issues. Additionally, since about 70% of the company’s business is done overseas, the company has been punished by a strong dollar. These struggles have led to the company eliminating 10% of its staff, a total of 140 people.
Aggression
This acquisition follows Amazon’s recent major purchase of One Medical, an online healthcare company, for which the tech giant shelled out over 3.9 billion USD. Amazon has a new CEO named Andy Jassy, and it seems Mr Jassy is more than prepared to make aggressive acquisitions. With iRobot, Amazon will now offer countless smart-home IoT devices throughout the home, including speakers, displays, thermostats, alarm systems, doorbells, tablets, surveillance systems, and other entertainment devices. Colin Angle, CEO of iRobot, said: “Amazon shares our passion for creating thoughtful innovations that enable people to do more things at home, and I can’t think of a better place for our team to continue our mission. I’m hugely excited to be a part of Amazon and to see what we can build together for customers in the years ahead.
Amazon reported 121.2 billion USD in revenue in Q2, up 7.2 per cent from 2021 but down slightly from the 7.3 per cent growth it reported in Q1 2022. It was Amazon’s slowest growth in more than two decades.