In its most recent effort to expand its selection of smart home products, Amazon.com Inc. will pay around $1.7 billion in cash to acquire robot vacuum manufacturer iRobot Corp. Amazon is the largest online retailer in the world.
Amazon will purchase iRobot for $61 per share, representing a premium of 22% over the stock’s most recent closing price of $49.99.
During pandemic lockdowns, hygiene-conscious buyers made investments in high-end robot vacuum cleaners, driving the Roomba maker’s stock price to its all-time high of $197.4.
The Roomba vacuums, which can cost up to $1,000, also collect spatial data on households that may be useful to businesses creating “smart home” technologies.
However, as customers reevaluate how they spend their money in the face of growing prices, iRobot’s second-quarter revenue dropped 30% as a result of weak demand and retailer cancellations across North America, Europe, the Middle East, and Africa.
According to analysts, large technology businesses with plenty of cash may engage in an M&A binge to benefit from low valuations brought on by growth pressures. As of the second quarter, Amazon has approximately $37 billion in cash and cash equivalents on hand.
Amazon sells wall-mounted smart displays, security cameras, smart thermostats, and just introduced Astro, a robot that resembles a dog.
However, products only account for a small portion of Amazon’s overall revenue.
If the agreement is canceled, Amazon would be obligated to pay iRobot a $94 million termination fee. Colin Angle will continue to lead iRobot after the transaction is complete.
Additionally, Amazon is spending $3.49 billion to acquire primary care provider One Medical, enhancing its online healthcare and introducing brick-and-mortar medical practices for the first time.
