By Akash Sriram
(Reuters) – Amazon.com has agreed to acquire iRobot, maker of the Roomba robotic vacuum, in a deal worth about $1.7 billion, in the retailer’s latest effort to expand its portfolio of smart home devices.
Amazon will pay $61 a share, a 22% premium over iRobot’s last closing price of $49.99.
The US Federal Trade Commission, which is already investigating Amazon, will likely review the transaction. “I would say there is a three in four chance of a thorough investigation and a one in four chance of a (business) questioning,” said Ethan Glass, an antitrust expert at the law firm Cooley.
In addition to sweeping up dirt, Roomba vacuums, which cost up to $1,000, collect spatial data from homes that could be valuable to companies developing smart home technology.
But iRobot’s fortunes took a hit as consumers began to rethink how they spend their money amid rising inflation. Second quarter revenue dropped 30% due to weak demand from retailers in North America, Europe, the Middle East and Africa.
The transaction comes at a time when analysts are expecting a breakthrough in mergers and acquisitions of large technology companies with cash left to take advantage of low valuations in the market. Currently, Amazon has cash and cash equivalents of more than 37 billion dollars.
“It looks like (Amazon CEO) Andy Jassy is going to employ more mergers and acquisitions than (his predecessor) Jeff Bezos and it makes more sense to me now that Amazon is bigger and has more money,” said Thomas Forte, an analyst. from DA Davidson.
If the deal doesn’t go through, Amazon will be required to pay iRobot a $94 million termination fee. Colin Angle will remain CEO of iRobot if the transaction is completed.
(By Akash Sriram and Nivedita Balu; additional reporting by Diane Bartz)
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