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Roomba maker iRobot has filed for bankruptcy and will be taken over by its Chinese supplier after the company that popularised the robot vacuum cleaner fell under the weight of competition from cheaper rivals.
The US-listed group on Sunday said it had filed for Chapter 11 bankruptcy in Delaware as part of a restructuring agreement with Shenzhen-based Picea Robotics, its lender and primary supplier, which will acquire all of iRobot’s shares.
The deal comes nearly two years after a proposed $1.5bn acquisition by Amazon fell through over competition concerns from EU regulators.
Shares in iRobot traded at about $4 a share on Friday, well below the $52 a share offered by Amazon.
“Today’s announcement marks a pivotal milestone in securing iRobot’s long-term future,” said Gary Cohen, iRobot’s chief executive. “The transaction will strengthen our financial position and will help deliver continuity for our consumers, customers and partners.”
Founded in 1990 by engineers from the Massachusetts Institute of Technology, iRobot helped introduce robotics into the home, ultimately selling more than 40mn devices, including its Roomba vacuum cleaner, according to the company.
In recent years, it has faced competition from cheaper Chinese rivals, including Picea, putting pressure on sales and forcing iRobot to reduce headcount. A management shake-up in early 2024 saw the departure of its co-founder as chief executive.
Amazon proposed buying the company in 2023, seeing synergy with its Alexa-powered smart speakers and Ring doorbells.
EU regulators, however, pushed back on the deal, raising concerns it would lead to reduced visibility for rival vacuum cleaner brands on Amazon’s website.
Amazon and iRobot terminated the deal little more than a month after Adobe’s $10bn purchase of design software maker Figma was abandoned amid heightened US antitrust scrutiny under Joe Biden’s administration.
Although iRobot received $94mn in compensation for the termination of its deal with Amazon, a significant portion was used to pay advisory fees and repay a portion of a $200mn bridge loan from private equity group Carlyle.
Picea’s Hong Kong subsidiary acquired the remaining $191mn of debt from Carlyle last month. At the time, iRobot already owed Picea $161.5mn for manufacturing services, nearly $91mn of which was overdue.
Alvarez & Marsal is serving as iRobot’s investment banker and financial adviser. The company is receiving legal advice from Paul, Weiss, Rifkind, Wharton & Garrison.