Shares of Amazon (AMZN -1.01%) were trading down 1.8% at 11:35 a.m. ET on Friday after the company signed an agreement to acquire iRobot (IRBT 19.31%) for $1.7 billion. It’s an all-cash transaction that comes to $61 per share for iRobot.
While iRobot won’t move the needle for the e-commerce giant’s massive business operations spanning retail, cloud services, advertising, and other services, the combination should be a perfect match and plays to both companies’ strengths.
Amazon already sells iRobot products through its online store and integrates them with its Alexa voice assistant. The two companies share a passion for investing in innovative new products that bring immense value to consumers. In iRobot’s case, that involves saving people time.
iRobot has struggled to grow its business while producing a high return on invested capital. But Amazon probably doesn’t mind that. This acquisition fits Amazon’s previous series of deals, most notably the maker of Ring doorbells.
The acquisition of iRobot fits a pattern of Amazon’s long-term interest in expanding into smart home products to keep customers locked into its ecosystem.
The press release didn’t specify a timeline for when the deal will be completed, but it did state that current iRobot CEO Colin Angle will remain in that role once the deal is final. That indicates Amazon plans to let iRobot continue doing what it’s already doing, but most likely with an extra cash infusion.
iRobot is another nifty tech product Amazon can offer Prime members. It should fit in well with Amazon’s current roster of previously acquired products, including Eero Wi-Fi routers. Perhaps Amazon will eventually launch new services and exclusive deals for Prime customers interested in trying robotic vacuums — something that would not have been economically feasible for iRobot to offer before.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Amazon and iRobot. The Motley Fool has a disclosure policy.