Amazon Agrees To Buy Roomba Maker iRobot, Inc. (NASDAQ:AMZN) has announced plans to acquire Roomba vacuum maker iRobot Corporation (NASDAQ:IRBT) in an all-cash transaction that values the company at $1.7 billion. Following the announcement, shares of Amazon slipped 2% in midday trading, while iRobot shares surged nearly 20%, accounting for about two-thirds of the stock’s five-session gain.

Amazon To Acquire iRobot

Amazon agreed to pay $61 per share for the Roomba maker. The acquisition will strengthen the e-commerce giant’s position in consumer robotics, a space the company has been interested in some time.

Last year, Amazon launched its Astro household robot, which is equipped with Alexa and used for home monitoring. Currently, it sells for $1,000 and is only available by invitation. Amazon also offers other smart home devices, including the Ring connected doorbell. The e-commerce firm acquired Ring in 2018.

CNBC notes that the acquisition of iRobot is Amazon’s fourth-biggest transaction at $1.7 billion. The company’s largest deal was the grocery store chain Whole Foods, which it acquired for $13.7 billion in 2017, followed by the $8.45 billion it paid for film studio MGM in 2021. Amazon’s third-largest transaction was primary-care provider One Medical, which it announced plans to acquire last month for $3.9 billion.

Background On iRobot

Roboticists at the Massachusetts Institute of Technology (MIT) founded iRobot in 1990. The company is best known for making the Roomba robotic vacuum, launched in 2002. The Roomba was the original robot vacuum capable of autonomously cleaning owners’ floors.

iRobot has also introduced other robotic devices, including robotic pool cleaners and mops. Additionally, the company has a subscription program that enables owners of its devices to replenish their equipment automatically and take advantage of other services.

iRobot is struggling right now amid the slowing economy. The company posted a 30% year-over-year decline in sales for the second quarter. Citing “unanticipated order reductions, delays and cancellations” among retailers around the world.

Pandemic-Related Trends Reverse

During the pandemic, consumers spent more time at home, so iRobot enjoyed robust sales as people purchased robot vacuums to offload some of the household chores. However, recent quarters have brought supply chain issues, and iRobot now reports that it has too much inventory on hand as retailers have ordered fewer robots than the company had expected.

iRobot reported $255.4 million in sales for the second quarter, coming up significantly short of the consensus estimate of $303 million from the analysts surveyed by Refinitiv. However, the company’s losses were much less than had been expected, although they widened to 35 cents per share. The consensus had stood at $1.55 per share in losses.

iRobot also announced plans to lay off about 140 workers or 10% of its workforce due to rising costs and tumbling sales.

This article originally appeared on ValueWalk

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