What just happened? iRobot, the maker of popular robot vacuum Roomba, has filed for Chapter 11 bankruptcy protection after 35 years of operation. The Massachusetts firm said it would be wholly acquired by its China-based contract manufacturer, Shenzhen Picea Robotics, and its subsidiary, Santrum Hong Kong.
It was back in March when iRobot warned investors that it might not survive the next 12 months. With revenue shrinking at a rapid pace, the company's shares, which had been worth $133 in 2021, fell to just $1.40 in November.
The writing was on the wall last month when iRobot announced that its third-quarter revenue was well below expectations due to continuing headwinds, ongoing production delays, and shipping disruptions. It meant that the company was forced to spend more cash, leaving itself with less than $25 million to survive – down from $46.6 million in late June.
iRobot will be a private company owned by Picea under the deal, and its common stock will be wiped from stock exchanges.
Roomba robots aren't going away. iRobot assures that the acquisition with Picea will allow it to continue operating and developing new products, make payments to vendors and creditors, and meet commitments to employees. It also says there are no "anticipated disruptions" to app functionality and product support for current customers.
Founded in 1990 by three roboticists who met at the Massachusetts Institute of Technology, iRobot launched the first Roomba robot vacuum cleaner in 2002. The disc-shaped devices became synonymous with the product category, but it later struggled in the face of cheaper competition.
iRobot's problems intensified after the pandemic, when it also had to deal with supply chain interruptions. It looked as if the company's fortunes were turning around in 2022 when Amazon agreed to buy the firm for $1.7 billion in cash – a 22 percent premium over iRobot's share price at the time. However, the acquisition fell apart in January 2024 due to EU regulatory concerns.
iRobot did receive a previously agreed termination fee of $94 million when the Amazon deal was abandoned, but part of it was used to pay a $200 million loan the company had taken from the Carlyle Group. The money was intended to be used as a stopgap until the acquisition closed.
"By combining iRobot's innovation, consumer-driven design, and research and development with Picea's history of innovation, manufacturing and technical expertise, we believe iRobot will be well-equipped to shape the next era of smart home robotics," said Gary Cohen, iRobot's CEO.
