Sign In
By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.
By signing in or creating an account, you agree with Associated Broadcasting Company's Terms & Conditions and Privacy Policy.
New Delhi: iRobot, the most famous US company whose product is the Roomba robot vacuum cleaner, has gone under Chapter 11 bankruptcy protection and even agreed to be purchased by a Chinese supplier. This shift is after years of declining sales, increasing competition and financial pressure in the wake of the pandemic boom.
The US-traded corporation announced that the takeover will be carried out by Picea Robotics, a subsidiary of its long-term manufacturing partner iRobot, which went bankrupt in Delaware as part of a restructuring supervised by the court to keep the company running as it refinanced its finances.
Under the deal, Picea will gain the ownership of the iRobot, which will give it the position of a proprietor and supplier. The chief executive, Gary Cohen, said that the transaction would help the company to improve its financial position and to concentrate on smart home robotics innovation.
He further said that the integration of the design and research strengths of iRobot with the manufacturing capabilities of Picea would enable the company to compete in a dynamic market that was dominated by other cheaper competitors.
The company has been facing supply chain issues and a flood of inexpensive robot vacuum brands, which have put pressure on iRobot profits. The company incurred a net loss of $145.5 million last year, and earlier this month, it had warned that it could have a possibility of going bankrupt.
iRobot, which was worth over $3 billion last year when the pandemic caused a boom in demand, is now worth approximately $137 million.
The bankruptcy is three years after the intended acquisition of an iRobot by Amazon ($1.4 billion) failed due to regulatory decisions in the European Union. Even though iRobot obtained breakup fees amounting to $94 million, a significant portion of that sum was spent in payment of advisory expenses and debt payment.
The unit of Picea based in Hong Kong subsequently took over the outstanding debt as a precursor to the present takeover.
When an acquisition is made by a Chinese supplier, the issue of data security and surveillance can resurface once again. iRobot mapping technology that generates detailed maps of the home of the user was already a hot button in the unsuccessful bid by Amazon.
iRobot indicated that its restructuring will enable it to carry on with its operations as usual. The company anticipates the absence of interruption in the app, product support, employees, or payments to suppliers.
iRobot shares declined by over 13% on Friday and are down more than 45 per cent this year, highlighting the worries of investors about the future of the company, despite its innovative position in consumer robotics.
