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Amazon lowers price for IRobot acquisition to $1.4 billion

Amazon is lowering its acquisition cost for iRobot.

A long-planned acquisition by Amazon of the maker of the robotic Roomba vacuum is a step closer to happening — but at a lower price than originally announced..

Amazon and iRobot have agreed to amend the existing terms of a merger agreement that was first announced in August 2022. Under the amended terms, Amazon will pay $51.75 per share cash, revised from the original cost of $61 per share. This 15% reduction in price per share will bring the total cost down from $1.7 billion to roughly $1.4 billion, including debt.

At the same time, iRobot has entered into a $200 million financing facility to fund its ongoing operations. Amazon, expects the change in price per share to be largely offset by the planned increase in iRobot’s net debt under the new financing facility.

When it was initially announced, the deal marked Amazon’s second billion-dollar acquisition in less than a month (and fourth largest ever). In late July, the company entered into an agreement to acquire One Medical, a membership-based primary health care provider, for $3.9 billion. That purchase was finalized in February 2023, with the caveat of a continuing FTC investigation

According to TechCrunch, the European Commission is conducting a regulatory investigation of this deal which won’t be completed until November 2022, and the FTC is considering a probe, as well. The deal has been approved by U.K. regulatory authorities. Amazon and iRobot say they are working cooperatively with the relevant regulators in their review of the merger

iRobot was founded in 1990 by the Massachusetts Institute of Technology roboticists. It is best known for its Roomba robot vacuum, which it introduced in 2002. The company has expanded its product portfolio over the years and it now includes technologies and advanced concepts in cleaning, mapping and navigation that are designed to help consumers make their homes easier to maintain and healthier places to live.

From Alex to Ring doorbells, Amazon has been expanding in the smart home space. In 2021, it introduced the Astro home assistant robot. The company is also heavily involved in developing robotic supply chain technology, and purchased Belgian supply cbain robotics provider Cloostermans in September 2022.

“We are pleased to support iRobot in this way so they can continue inventing and delivering for customers while our proposed acquisition awaits regulatory approval,” said Dave Limp, senior VP of Amazon Devices. “As we said when we announced the merger last August, customers love iRobot products and we’re excited to work with them to invent in ways that make customers’ lives easier and more enjoyable.”

“We’ve reached an amended agreement with Amazon that reflects the incurrence of iRobot’s new debt,” said Colin Angle, chairman and CEO of iRobot. “iRobot is taking on new financing that we believe is sufficient to support our operations in a hyper competitive environment and meet our liquidity needs as well as pay off iRobot’s existing debt. This new financing is the outcome of a thorough process and represents the best terms reasonably obtainable on additional financing to support our operations.”

Completion of the transaction remains subject to customary closing conditions, including regulatory approvals as well as approval of the amended merger agreement by iRobot’s stockholders.

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