A potential deal between Amazon and robot maker iRobot

The Internet giant Amazon.com Inc. (AMZN) announced its intention to acquire iRobot Corp., a cleaning equipment manufacturer. This message sent IRBT quotes up 19% to $59.54 at auction on August 5. AMZN quotes have declined. Does this mean a negative attitude of investors toward the deal? Amazon acquires iRobot for $1.7 billion. The price includes the entire iRobot business, including robot vacuum cleaners and air purifiers. For Amazon, the moment of purchase is a good one since IRBT shares are trading well below last year’s high, close to $ 100. 

iRobot has problems with growing competition from various companies that produce robot vacuum cleaners and other equipment. Among the competitors are such influential brands as LG and Samsung, whose ecosystems are difficult to fight. The profitability of the iRobot business deteriorated, which became especially noticeable in the second quarter of 2022, in which revenue decreased by 30% year-on-year. The demand for premium iRobot vacuum cleaners has likely fallen due to inflation, against which inventory has increased sharply, and the operating flow has reached $64 million. Nevertheless, iRobot has many valuable developments and extensive experience creating the most advanced home cleaning robots. 

Amazon can use all this in its promising intelligent home projects. In particular, Amazon recently introduced Astro’s home assistant robot. Amazon plans to develop the home ecosystem by integrating it with its subscription services. The presence of iRobot technology in this ecosystem can be an incentive for many consumers to subscribe to Prime services, as well as other Amazon services. Thus, for Amazon, the acquisition makes sense and has long-term prospects. According to rumors, the deal to buy iRobot will by US antitrust regulators does not necessarily mean it will be blocked. Still, many Amazon acquisitions have already attracted the attention of the US Federal Trade Commission.