Carlyle's US$200 million loan to iRobot triggers a lower buyout offer from Amazon
Investment firm Carlyle announced that it's giving iRobot a US$200 million loan through its private credit arm.
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The backstory: In the world of consumer robots, there's iRobot, a company known for creating innovative bots and smart home devices to make our lives easier. You might've heard about its famous Roomba robot vacuum, which hit the market back in 2002.
Last August, Amazon showed interest in buying iRobot for around US$1.7 billion. This caught the attention of experts in antitrust regulations, and they predicted that the merger would face some serious scrutiny.
The US Federal Trade Commission and regulators in the EU and UK launched in-depth investigations into the buyout. The EU, in particular, had concerns that if the deal went through, Amazon could gain access to iRobot’s user data and put competitors at a disadvantage. To get to the bottom of it all, they set a deadline of December 13 to figure out the potential impact of this acquisition. UK regulators approved the deal last month.
More recently: Since the news of the possible acquisition broke, iRobot has been experiencing a drop in orders for its Roomba vacuums, and to add to its worries, its cash reserves have been dwindling.
According to the company's US Securities and Exchange Commission reports, iRobot reported a net loss of around US$286 million in 2022. By April 1 of this year, its cash and cash equivalents had dropped to US$47.9 million, a significant decrease from the US$117.9 million it had at the end of 2022, as per the company's earnings report.
The development: Investment firm Carlyle announced that it's giving iRobot a US$200 million loan through its private credit arm, which could earn Carlyle a return of over 14% a year. This loan is to help iRobot stay afloat as it gets through the antitrust review.
But Amazon isn’t very happy about the additional debt involved now in the acquisition. In fact, it slashed the acquisition price by 15% to around US$1.4 billion. Under the revised deal, Amazon would now pay US$51.75 in cash for each share of iRobot, compared to the original price of US$61. iRobot's share price dropped around 14% after the announcement.
Key comments:
"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," said iRobot Chairman and CEO Colin Angle in a statement Tuesday.
"This new financing is the outcome of a thorough process and represents the best terms reasonably obtainable on additional financing to support our operations," Angle said.
“Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive — from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin,” said Dave Limp, Amazon’s hardware devices chief, in a statement last year. “Customers love iRobot products — and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”
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