Amazon.com Inc will pay $1.7 billion in cash to purchase iRobot Corp, the developer of robot vacuum cleaners, in the latest attempt by the world's leading online retailer to widen its basket of smart home goods.
Amazon will pay $61 per share, valuing Roomba at a 22 per cent premium to its previous closing price of $49.99.
Its stock increased by roughly 19 per cent in early trading. iRobot traded at $197.4 during the pandemic lockdowns, as hygiene-conscious buyers invested in expensive robot vacuum cleaners.
Roomba vacuums, which may cost up to $1,000, gather spatial data on families that could prove to be useful to companies in developing so-called smart home technologies.
However, its fortunes suffered as people began to reconsider how they spent their money in the face of rising inflation. Its revenue decreased 30% in the second quarter due to sluggish demand from merchants in North America, Europe, the Middle East, and Africa.
The transaction comes at a time when analysts anticipate cash-rich technology firms going on an M&A spree to take advantage of low values due to growth challenges. Amazon presently has more than $37 billion in cash and cash equivalents.
"We haven't heard much lately about Amazon's smart home devices strategy and this acquisition puts it back on the agenda," said Atlantic Equities analyst James Cordwell.
Devices account for a small portion of Amazon's overall sales, which include smart thermostats, security devices, wall-mounted smart displays, and the recently announced Astro, a canine-like robot.
"It seems like (CEO) Andy Jassy is going to employ M&A more than Jeff Bezos and it makes more sense to me now that Amazon is bigger and has more cash," said D.A. Davidson analyst Thomas Forte.
If the agreement is terminated, Amazon must pay iRobot a $94 million termination fee. Colin Angle will continue to lead iRobot after the transaction is completed.
(Source:www.financialpost.com)
Amazon will pay $61 per share, valuing Roomba at a 22 per cent premium to its previous closing price of $49.99.
Its stock increased by roughly 19 per cent in early trading. iRobot traded at $197.4 during the pandemic lockdowns, as hygiene-conscious buyers invested in expensive robot vacuum cleaners.
Roomba vacuums, which may cost up to $1,000, gather spatial data on families that could prove to be useful to companies in developing so-called smart home technologies.
However, its fortunes suffered as people began to reconsider how they spent their money in the face of rising inflation. Its revenue decreased 30% in the second quarter due to sluggish demand from merchants in North America, Europe, the Middle East, and Africa.
The transaction comes at a time when analysts anticipate cash-rich technology firms going on an M&A spree to take advantage of low values due to growth challenges. Amazon presently has more than $37 billion in cash and cash equivalents.
"We haven't heard much lately about Amazon's smart home devices strategy and this acquisition puts it back on the agenda," said Atlantic Equities analyst James Cordwell.
Devices account for a small portion of Amazon's overall sales, which include smart thermostats, security devices, wall-mounted smart displays, and the recently announced Astro, a canine-like robot.
"It seems like (CEO) Andy Jassy is going to employ M&A more than Jeff Bezos and it makes more sense to me now that Amazon is bigger and has more cash," said D.A. Davidson analyst Thomas Forte.
If the agreement is terminated, Amazon must pay iRobot a $94 million termination fee. Colin Angle will continue to lead iRobot after the transaction is completed.
(Source:www.financialpost.com)
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