IRobot Roombas its way into Amazon’s arms
Bedford-based robotics company to be acquired for $1.7 billion
For the second time in a decade, online giant Amazon is scooping up one of Greater Boston's leading robotics companies. This time, it's iRobot, the Bedford-based company that created the Roomba and helped turn home robots into a billion-dollar business.
Amazon said Friday that it will acquire iRobot for $61 per share in an allcash deal that values the company at about $1.7 billion. The offer is a 22 percent premium to iRobot's closing price of about $50 Thursday, but much below its peak of about $99 over the past year.
The companies did not provide a timeline for closing the deal and declined interview requests Friday. Shares of iRobot closed up 19 percent Friday at $59.54.
The acquisition comes during challenging times for iRobot, which reported $1.6 billion in revenue last year but has seen sales fall so far this year, in part due to supply chain challenges. The company Friday also laid out a series of restructuring efforts, which will include laying off about 140 employees, or 10 percent of its global workforce. iRobot will also shift some jobs to lower-cost regions and reduce its real estate footprint. Currently iRobot employs about 700 people in Massachusetts.
If and when the sale goes through, iRobot will join Amazon's growing stable of robotics operations, including North Reading-based Kiva Systems, which Amazon acquired for $775 million a decade ago and renamed Amazon Robotics.
iRobot is considered to be the godfather of the region's thriving robotics scene, which now includes more than 400 companies, according to trade group MassRobotics. It has also played an outsize role in accelerating the adoption of home robots, selling some 40 million worldwide.
The company has long had a close relationship with Amazon. Founder Jeff Bezos even served for several years in the mid-2000s as a strategic adviser to iRobot and a mentor to iRobot chief executive Colin Angle.
“He recognized early on that robots were a very disruptive game-changer,” Angle told the Globe in 2015.
Angle will remain CEO of iRobot after the acquisition, the companies said.
iRobot became known early on for military robots used in surveillance and bomb disposal. The company's machines helped explore the rubble of the World Trade Center and disarm booby traps in Iraq. Its biggest success by far came with the 2002 launch of Roomba, which eventually dwarfed iRobot's military business.
Other iRobot products have been less successful. The company's Braava floor-mopping robot has sold well, but other machines, like a robot for cleaning roof gutters, never caught on.
iRobot has also faced competition from Chinese-owned rival SharkNinja, which has its US headquarters in Needham. iRobot has filed multiple federal lawsuits arguing that SharkNinja's products violate iRobot patents, but SharkNinja has repeatedly triumphed.
In January, iRobot asked the US International Trade Commission to ban SharkNinja from importing its machines. The case is still pending.
Recently, iRobot has mainly focused on using advanced software and sensors to add enhanced capabilities to its robotic mops and vacuums. Early Roombas randomly wandered across the floor; today's models generate 3D maps of the customer's home and use artificial intelligence to find their way and avoid obstacles.
Cofounder Helen Greiner, who departed iRobot in 2008 and now runs a gardening robot company, said she thinks Roomba's artificial intelligence features mesh well with Amazon's Alexa speech-control technology.
“What I love about this Amazon acquisition,” she said, “is Amazon's large bet in the consumer robot space.”
Amazon and iRobot have been working on meshing their consumer products for years. In 2017, they released a feature that let people use Alexa to start and stop their Roomba. Now, the feature supports more complicated demands, such as, “Alexa, ask Roomba to vacuum the master bedroom,” or “Alexa, ask Braava to schedule mopping in the morning.”
Amazon has its own home robot, the Astro, which acts as a roving home security camera. Greiner said that the combined smarts of Astro, Alexa, and Roomba could hasten the day when homes feature “a whole suite of robots for the house, helping you with everything.”
But Amazon's dominance in the home technology market concerns Robert Weissman, president of consumer rights think tank Public Citizen, who warned it would give the company access to more personal information about customers.
“This is not just about Amazon selling another device,” Weissman said in a statement. “It's about the company gaining still more intimate details of our lives to gain unfair market advantage and sell us more stuff.”
And it's possible the deal could draw scrutiny from the Biden administration, which is seeking to rein in the market power of Amazon and other big tech companies and last month sued to block Meta's planned acquisition of virtual reality software maker Within. A similar challenge is possible here, said Ben Rose, president of Battle Road Research in Lexington.
“It may not be a smooth path to closing the deal,” he said.