iRobot needs to increase its debt, so Amazon is bidding less
Amazon is lowering its acquisition price for robotic vacuum-maker iRobot, after the duo have hit regulatory snags trying to get the deal over the line.
The ecommerce giant announced plans to acquire iRobot last August in an all-cash deal worth $1.7 billion, equating to around $61 per share. Now, Amazon has said that it’s amending its bid to $51.75, roughly 15% lower than its initial bid.
The reason, it seems, stems from the ongoing antitrust headwinds that Amazon is facing both domestically and in Europe, which has impacted iRobot’s bottom line. Indeed, iRobot has said that it is having to raise $200 million in debt to “fund its ongoing operations,” a debt that Amazon will take on when (or if) the deal finally closes — and that is why it has tabled a new lower bid for iRobot.
“We’ve reached an amended agreement with Amazon that reflects the incurrence of iRobot’s new debt,” iRobot CEO Colin Angle said in a statement. “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.”
Amazon’s megabucks iRobot deal was always likely to attract regulatory scrutiny. While the U.K. finally approved the acquisition last month, the European Commission (EC) confirmed a few weeks back that it would be pushing ahead with a more in-depth probe — this won’t be resolved until November at the very earliest. In the U.S., meanwhile, the Federal Trade Commission (FTC) is also mulling an official investigation into the deal.