iRobot, the US company behind Roomba robotic vacuum cleaners, has filed for Chapter 11 bankruptcy and will be acquired by its main manufacturer, the Shenzhen-based Picea Robotics. The restructuring comes after Amazon's planned $1.7 billion takeover collapsed last year and amid mounting pressure from cheaper Chinese competitors and soaring US import tariffs.
The Massachusetts-based firm announced the bankruptcy filing on Sunday. Under the pre-packaged deal, Picea Robotics will purchase all of iRobot's shares, combining the American company's innovation and design expertise with its Chinese supplier's manufacturing capabilities. The acquisition aims to secure continuity for consumers and partners while addressing iRobot's deteriorating financial position.
Tariffs and Competition Squeeze
iRobot has struggled under the weight of 46% US import duties on goods from Vietnam, where its products are primarily manufactured. The tariffs alone cost the company $23 million this year. Meanwhile, low-cost Chinese rivals have intensified competition, forcing iRobot to slash prices and invest heavily in new technology to maintain market position.
The company's valuation reflects its challenges. Once worth $3.56 billion in 2021, iRobot is now valued at approximately $140 million. Shares plunged more than 13% on Friday following bankruptcy reports.
"Pivotal Milestone" for Future
Gary Cohen, iRobot's chief executive, framed the acquisition as essential for survival. «Today's announcement marks a pivotal milestone in securing iRobot's long-term future», he said. «The transaction will strengthen our financial position and will help deliver continuity for our consumers, customers and partners.»
Cohen emphasized the strategic fit between the companies: «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.»
Failed Amazon Deal
The current acquisition follows Amazon's thwarted attempt to buy iRobot. The online retail giant agreed to a $1.7 billion takeover in August 2022, but European Union competition regulators blocked the deal in January last year. The European Commission feared Amazon could harm rivals on its marketplace, particularly in major European markets like France, Germany, Italy and Spain.
Roomba's Market Position
Founded in 1990 by three members of MIT's Artificial Intelligence Lab, iRobot launched its first Roomba robot vacuum in 2002. The brand has since dominated key markets, commanding approximately 42% of the US robotic vacuum cleaner market and 65% in Japan. The company has sold millions of units globally over more than three decades.
Picea Robotics, with research and development facilities in China and Vietnam, employs more than 7,000 people worldwide and has sold over 20 million robotic vacuum cleaners. The company is a significant global player in the smart home robotics sector.
iRobot stated the bankruptcy process will not disrupt its app services, supply chains or product support for existing customers.
Note: This article was created with Artificial Intelligence (AI).
