Amazon buys cleaning robot manufacturer iRobot for $1.66 billion

In a separate earnings report, iRobot said it was experiencing declining earnings and had to lay off 10% of its workforce.

Amazon announced on Friday that it has agreed to acquire vacuum cleaner maker iRobot for about $1.7 billion and acquire another company to expand its collection of smart home appliances amid broader concerns about its market power.

iRobot sells its products worldwide and is best known for the Roomba circular vacuum cleaner, which would add voice assistant Alexa, astro robot and ring security cameras, and others to the list of smart home features that the Seattle-based resident would like to see E-commerce and are offered tech giant.

The move is part of Amazon’s offer to own part of the home space through services and to accelerate its growth beyond retail, said Neil Saunders, managing director at GlobalData Retail. A slew of cleaning robots expands the company’s tech arsenal, making it more involved in consumers’ lives beyond static things like voice control.

Amazon’s Astro robot, which helps with tasks like setting an alarm clock, was unveiled last year at an introductory price of $1,000. But its launch has been limited and has received a lackluster response.

Amazon hasn’t had much success with home robots, but the acquisition of iRobot and the company’s strong reputation offer a “massive foothold in the consumer robot market” that could help Amazon repeat the success of its Echo line of smart speakers, Lian said Jye Su, robotics industry analyst at ABI Research.

Su said it also shows the shortcomings of consumer robot vendors like iRobot, which have struggled to expand beyond a niche product and found themselves in a “race to the bottom” with Korean and Chinese makers offering cheaper versions of a robot vacuum cleaner.

On Friday, iRobot announced its quarterly results. Sales plummeted 30%, largely due to order cuts and delays, and the company said it would lay off 10% of its workforce.

Amazon said it will acquire iRobot for $61 per share in an all cash transaction that will include iRobot’s net debt. The company has total debt of approximately $332.1 million as of July 2. The transaction is subject to shareholder and regulatory approvals. Upon completion, iRobot CEO Colin Angle will remain in his position.

Noting that iRobot has been running its robotic platform on Amazon’s cloud service unit AWS for many years, Su said the acquisition could lead to greater integration of Amazon’s voice recognition and other features into vacuum cleaners.

In midday trade, iRobot shares were up 19%. Amazon’s was down 1.4%.

The deal comes as anti-monopoly advocates continue to raise concerns about Amazon’s increasing dominance. The purchase of iRobot is Amazon’s fourth-biggest acquisition, led by the $13.7 billion deal to buy Whole Foods in 2017. Last month, the company announced that it had acquired primary care provider One Medical, valued at around $3 $.9 billion, a move that further expanded its reach into healthcare.

On Friday, groups campaigning for tougher antitrust rules urged regulators to block the iRobot merger, arguing it gives Amazon more access to consumers’ lives and furthers its dominance in the smart home market.

“The last thing America and the world needs is Amazon sucking up more of our personal information,” said Robert Weissman, president of progressive consumer rights advocacy group Public Citizen.

“This isn’t just about Amazon selling another device on its marketplace,” Weissman said. “It’s about the company getting even more intimate details of our lives in order to gain an unfair market advantage and sell us more stuff.”

Groundbreaking antitrust legislation targeting Amazon and other big tech companies has sat in Congress for months as prospects for full Senate or House votes have dimmed.

Last month, Sen. Amy Klobuchar, D-Minn., who heads the Senate Department of Justice antitrust panel, asked the Federal Trade Commission to investigate the acquisition of One Medical, echoing other critics who have urged regulators to stop the purchase block over concerns about Amazon’s past behavior and potential impact on consumer health data. Regulators also have discretion to challenge Amazon’s $8.5 billion takeover of Hollywood studio MGM, which closed earlier this year.

iRobot was founded in 1990 by a trio of roboticists from Massachusetts Institute of Technology, including Angle. iRobot’s early ventures resulted in rovers capable of performing military and disaster relief tasks after the September 11 attacks.

Profits from defense contracts allowed iRobot to experiment with a variety of other robots, produce some duds, and a major commercial success: the first Roomba, launched in 2002 and pioneering the automatic vacuum cleaner market.

The company spun off its defense robotics division in 2016 to become almost exclusively a seller of vacuum cleaners and a few other household robots like the Braava robot mop. It had planned to launch a robotic lawn mower in 2020 but backed out, citing issues surrounding the pandemic. Amazon buys cleaning robot manufacturer iRobot for $1.66 billion

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