Amazon acquires iRobot, Roomba maker, for $1.7billion

As the ecommerce giant Amazon is expanding its home electronics portfolio, it has agreed to buy Roomba maker iRobot for $1.7 billion in an all-cash deal. Roomba will join Amazon's Alexa devices and Ring doorbells.

?Household robots haven't been a big hit for Amazon so far. Astro robot, a device that helps set alarms, was introduced last year for a price of $1,000. Yet, it has received a mediocre response and has been limited in its rollout.

?However, the acquisition of iRobot and the company's strong market reputation will provide Amazon with a "powerful position in consumer robotics" that could rival the success of the company's own Echo smart speakers.

?What's iRobot?

iRobot designs and builds behavior-based, artificially intelligent robots for consumers to help them with household tasks. In addition to robotic mops, it has introduced automatic pool cleaners. In its iRobot Operating System (OS), iRobot generated maps of homes so that robots could understand homes better with their deep learning capabilities.

?Amid the pandemic, iRobot was trading at double its acquisition valuation. However, inflation has impacted consumer spending in recent quarters, resulting in a 30 percent decline in revenue. A slowdown in business forced the company to restructure operations in order to stay afloat. Amazon seized the opportunity and acquired iRobot at a discount from its pandemic highs to add to its fleet of smart home devices.?

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This information has been prepared by Joseph Alfie who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.