iRobot (IRBT) shares fell by 13.7% on Tuesday after Amazon (AMZN) announced that it would reduce its purchase price of the household robot maker, which the tech giant bought for $1.7 billion last August in an effort to expand its offering of smart devices.
Key Points to Remember
- Amazon has announced that it will lower its purchase price of iRobot, maker of the Roomba robot vacuum cleaner, which the tech giant bought for 1.7 billion dollars last August.
- Under the revised agreement, Amazon will pay $51.75 per iRobot share, down from the original price of $61 per share agreed to last year.
- The The acquisition is pending regulatory approval, with European lawmakers expected to make a final decision in December.
- iRobot shares fell nearly 14% on news and are in territory negative for the year.
Under the revised deal, Amazon will pay $51.75 per iRobot share, down from the original price of $61 per share agreed to last year. The lower price reflects iRobot's higher debt burden since the deal was announced.
Meanwhile, iRobot entered into a $200 million financing facility to fund its ongoing operations and increasing debt burden. For Amazon, the lower pay-per-share will likely be offset by iRobot's expected increase in net debt under the new facility.
'We' entered into an amended agreement with Amazon that reflects the emergence of iRobot's new debt, " said Colin Angle, president and CEO of the company. "iRobot is taking on new funding which we believe is sufficient to support our operations in a hyper-competitive environment and meet our liquidity needs."
The leaders of Amazon said they were willing to offer financial support.
'We are pleased to support iRobot in this way so that they can continue to invent and deliver for customers while our acquisition proposal awaits regulatory approval,' said Dave Limp, senior vice president of Amazon Devices.
The acquisition is still pending regulatory approval. It has been the subject of antitrust scrutiny in Europe, where regulators challenged the deal on the grounds that it could further strengthen Amazon's dominant position as a supplier online market. A decision from the European Commission is expected on December 13.
Amazon were flat in afternoon trading on Tuesday, while iRobot's plunged nearly 14%. Amazon shares are up more than 50% year-to-date amid a broader rally in big tech stocks, while iRobot's are down by 3%.
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