Yahoo Finance IRobot Falls After Amazon Lowers Offer 15% to $51.75 a Share
(Bloomberg) -- IRobot Corp. tumbled after Amazon.com Inc. said it’s paying less to acquire the Roomba maker to account for fresh financing taken out by the company as a merger review drags on.
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The Seattle-based e-commerce giant said it will now pay $51.75 per share, or 15% less than its original offer.
IRobot has entered into a $200 million financing facility to fund its ongoing operations, the companies said in a statement. The borrowing will boost iRobot’s net debt, necessitating a lower price.
The senior secured term loan, provided by the private credit arm of Carlyle Group Inc., carries a lofty floating interest rate that currently comes to about 14% and imposes onerous terms on iRobot. For example, if the company pays back a portion or all of the loan early, it’s required to pay Carlyle a penalty.
IRobot shares fell about 11% in New York, while Amazon was down slightly.
The vacuum maker’s sales surged during the pandemic as housebound families looked for faster ways to clean their residences. But demand for iRobot’s products has since waned. Meanwhile, rivals have been rolling out their own robot cleaning machines, prompting the company to file patent infringement lawsuits.
In May, iRobot reported sales and earnings per share that missed estimates. As of April 1, the company’s cash and cash equivalents were $47.9 million, compared with $117.9 million at the end of 2022. During the quarter, iRobot drew $27 million from its credit facility.
“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,” iRobot Chief Executive Officer Colin Angle said in a statement.
Since Amazon announced the transaction last August, the Federal Trade Commission and European regulators have been probing the deal. Amazon’s price cut is the latest example of how tougher US regulatory reviews are impacting dealmaking. Earlier this year, Intercontinental Exchange Inc. cut the price it was paying to buy Black Knight Inc. after agreeing to divest a unit due to antitrust concerns.
European regulators set a deadline of Nov. 15 to vet the potential impact of the Amazon-iRobot deal, which has sparked a backlash from privacy activists.
(Updated with context throughout.)
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