Aug 5 (Reuters) – Amazon.com Inc ( AMZN.O ) will acquire robot vacuum cleaner maker iRobot Corp ( IRBT.O ) in an all-cash deal for about $1.7 billion, in the latest push by the world’s biggest online company global retailer to expand its cart 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% in early trading. At its peak during the pandemic lockdown, iRobot traded at $197.4 as hygiene-conscious consumers invested in premium robot vacuums.
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In addition to cleaning up dirt, Roomba vacuums, which cost up to $1,000, collect spatial data about households that could prove valuable to companies developing so-called smart home technology.
However, its fortunes suffered as consumers began to rethink how they 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 as analysts expect cash-rich tech companies to start M&A to take advantage of low valuations due to pressure on growth. Amazon currently has over $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 make up a small portion of total sales for Amazon, which sells smart thermostats, security devices, wall-mounted smart displays and recently released a dog-like robot called Astro.
“It looks like (CEO) Andy Jassy is going to hire more M&A than Jeff Bezos, and it makes more sense to me now that Amazon is bigger and has more money,” said DA Davidson analyst Thomas Forte.
In the event that the deal is terminated, Amazon will have to pay iRobot a $94 million termination fee. After the deal closes, Colin Engle will remain iRobot’s CEO.
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Reporting by Akash Sriram and Nivedita Balu in Bengaluru; Editing by Arun Koyyur
Our standards: The Thomson Reuters Trust Principles.
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