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Amazon Buying Roomba Maker iRobot For $1.7 Billion

If Amazon completes a deal for iRobot, Roomba would join other Amazon-owned products that give the retailer more ways to power smart homes /...

If Amazon completes a deal for iRobot, Roomba would join other Amazon-owned products that give the retailer more ways to power smart homes /Cayce Clifford.
Amazon.com Inc. is buying Roomba maker iRobot Corp. for $1.7 billion, giving the online retailer another connected-home product that deepens its ties to consumers’ homes. Amazon agreed to pay $61 a share for iRobot in an all-cash deal. The price, which includes a small amount of debt, represents a 22% premium to iRobot’s closing price of $49.99 on Thursday.

IRobot shares rose 19% to $59.54 in recent trading. They are off 9.7% year to date. Amazon shares fell 0.8% to $141.41. IRobot introduced its Roomba vacuum in 2002 and has sold more than 40 million units since. The wireless, smart-vacuum learns and maps spaces to clean dust and messes. It is a staple of Amazon’s Prime Day shopping bonanza, having been a featured product for eight straight years.

IRobot in May had projected reaching sales of $1.6 billion to $1.7 billion this year. It withdrew that guidance on Friday in light of the deal and other challenges. Roomba would join other Amazon-owned products like the Alexa virtual assistant speaker and Ring video doorbell that together give the retailer more ways to power smart homes.

IRobot would be the fourth-largest acquisition by Amazon, ranking behind the 2017 acquisition of Whole Foods for $13.7 billion, an $8.5 billion purchase of movie studio MGM in March and last month’s agreement to buy 1Life Healthcare for $3.9 billion.

The deal comes as iRobot is struggling. On Friday, it reported a 30% drop in second-quarter sales, which came in at $255.4 million, and a net loss that widened to $43.4 million, or $1.60 a share, from $2.8 million, or 10 cents a share, in the year-ago quarter.

IRobot said that the latest quarter’s results were hurt by reduced orders, supply-chain problems and a stronger dollar. The company said that it is also laying off 140 employees, or about 10% of the global workforce, as well as taking other measures to cut costs by up to $10 million this year.

IRobot Chief Executive Colin Angle will remain in his position upon completion of the acquisition, which requires approval from shareholders.