iRobot Shares Plunge After Amazon Lowers Purchase Price

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Shares of iRobot (IRBT) plunged 13.7% on Tuesday after Amazon (AMZN) said it would lower its purchase price of the home robot maker, which the tech giant bought for $1.7 billion last August in an effort to expand its offerings of smart devices.

Key Takeaways

  • Amazon said it would lower its purchase price of iRobot, maker of the robot vacuum cleaner Roomba, which the tech giant bought for $1.7 billion last August.
  • Under the revised agreement, Amazon will pay $51.75 per iRobot share, down from the initial price of $61 per share agreed to last year.
  • The acquisition is pending regulatory approval, with EU lawmakers expected to give a final decision in December.
  • iRobot shares tumbled close to 14% on the news, and are in negative territory for the year.

Under the revised agreement, Amazon will pay $51.75 per iRobot share, down from the initial price of $61 per share agreed upon last year. The lower price reflects iRobot’s higher debt burden since the deal was first announced.

Meanwhile, iRobot has entered into a $200 million financing facility to fund its ongoing operations and rising debt burden. For Amazon, the lower per-share payment will likely be offset by the planned increase in iRobot’s net debt under the new facility.

“We’ve reached an amended agreement with Amazon that reflects the incurrence of iRobot’s new debt,” said Colin Angle, the company’s chair and CEO. “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.”

Amazon executives said they were willing to offer financial support.

“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 vice president of Amazon Devices.

The acquisition is still pending regulatory approval. It’s faced antitrust scrutiny in Europe, where regulators have challenged the deal on grounds that it could further entrench Amazon’s dominant position as an online marketplace provider. A decision by the European Commission is expected on December 13.

Amazon shares were flat in afternoon trading Tuesday, while those of iRobot plunged close to 14%. Shares of Amazon are up more than 50% year-to-date, amid a broader rally in big tech stocks, while those of iRobot are down 3%.

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