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The story of Irobot should have followed a completely different scenario. With a purchase offer for $ 1.7 billion By Amazon, the pioneer of robotic vacuum cleaners had to integrate the ecosystem of the e-commerce giant, benefiting from technological and commercial synergies. But the European regulators vet sealed a completely different destiny. Deprived of the acquisition supposed to save her, Irobot is now faced with a major crisis, in which his survival is engaged.
The company, in difficulty for several years, has seen its stock market valuation collapsed under 200 million dollars on the announcement of the failure of the acquisition. His losses accumulate, his debt becomes too heavy and his future is written in dotted case of acquisition school which does not succeed.
The illusion of a rescue by Amazon
When Amazon announces its intention to acquire Irobot in August 2022, the news was welcomed as a very positive signal. The company, losing speed in the face of increased competition, notably Chinese Xiaomi, sees in this rapprochement a beautiful exit door. But regulatory obstacles will quickly slow down its ambitions.
Brussels suspects Amazon of wanting to strengthen his hegemony on the connected objects and retail market, and fears a sidelining of Roomba competitors on his marketplace. The e-commerce giant, under pressure from the antitrust authorities on both sides of the Atlantic, finally renounces the operation in early 2024.
The stock market penalty is immediate: the IROBOT action 26 % drop in pre-marketconfirming the distrust of investors. In the space of a few hours, the company goes from target coveted to actor in distress.
A weakened model, a toxic debt
If the failure of the redemption has accelerated the crisis, Irobot already displayed disturbing signs of decline. The brand, a pioneer of vacuum cleaners with its Roomba range, has gradually lost ground in the face of more competitive Chinese actors like Ecovacs and Roborockwhich offer less expensive and technologically advanced alternatives.
THE last quarter 2023 is a disaster ::
- Decline of 44 % of turnovera brutal fall attributed to a collapse of demand and poorly calibrated promotional expenses.
- Net loss of $ 77.1 milliondigging a structural deficit.
- Tension cash flowwith only $ 134 million in cash available, down compared to the previous year.
In this very degraded context, the company is trapped in a Debt at prohibitive cost. In 2023, to finance his farm pending the outcome of the redemption, Irobot contracted a Loan of $ 200 million from Carlyle Group. But at 9 points above the Sofror a rate exceeding 14 %the operation turns out to be a financial trap from which it will be difficult to get rid of. To develop this debt, the company must Pay $ 3.6 million in additional feesstill drawing on his meager resources.
Irobots fell its latest cards: restructuring or liquidation
THE board of directors has just opened a strategic reviewexploring all possible options:
- A refinancing Debt, difficult to obtain in a context of high rate and with more than uncertain profitability.
- A Total or partial assignment of the company, with the hope that a buyer manifests to absorb activity.
- A restructuringpotentially implying posts and a refocusing on more promising segments.
The lesson to remember: an acquisition should never be a rescue plan
The story of Irobot highlights a frequent strategic error: Bet exclusively on an acquisition to ensure its survival. Rather than looking for alternatives or strengthening its economic model, the company has fully aligned with a scenario that did not depend on it and on which it was going to be difficult to bounce in case of failure.
The merger-acquisition operations are more and more scrutinized by regulators, and many are now failed like Adobe’s offer for the repurchase of Figma, or the Mega Fusion NVIDIA / ARM failed by American, European and British regulators, and finally the acquisition of PLAID by Visa refused by the FTC which considered that the redemption would have allowed Visa to eliminate Competient emerge on digital payments and open banking.
Good news that quickly turned into a disaster scenario. What future for Irobot? Following the next episode.
