Aug 5 (Reuters) – Amazon.com Inc ( AMZN.O ) will acquire robot vacuum maker iRobot Corp ( IRBT.O ) in an all-cash deal for about $1.7 billion, in the latest push by the world’s largest online retail network to expand your 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 lockdowns, iRobot traded at $197.4 as hygiene-conscious consumers invested in premium robot vacuums.
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In addition to sweeping up dirt, Roomba vacuums that cost up to $1,000 collect spatial data about homes that could prove valuable to companies developing so-called smart home technology.
But its fortunes took a hit as consumers began rethinking 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 at a time when analysts expect cash-rich tech companies to go on a M&A spree to take advantage of low valuations due to growth pressures. Amazon currently has cash and cash equivalents of over $37 billion.
“We haven’t heard much about Amazon’s smart home device strategy lately, and this acquisition puts it back on the agenda,” said Atlantic Equities analyst James Cordwell.
The devices represent a fraction of the global sales of Amazon, which sells smart thermostats, security devices, a smart wall-mounted display and had recently launched a canine-like robot called Astro.
“It looks like (CEO) Andy Jassy will do M&A more than Jeff Bezos and it makes more sense to me now that Amazon is bigger and has more cash,” said Thomas Forte, an analyst at DA Davidson.
If the deal is terminated, Amazon would have to pay iRobot $94 million in termination fees. Following the completion of the deal, Colin Angle will continue as CEO of iRobot.
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Reporting by Akash Sriram and Nivedita Balu in Bangalore; Editing by Arun Koyyur
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