iRobot Files for Bankruptcy
iRobot, the company known for its Roomba robot vacuums, has filed for bankruptcy. This action follows the termination of its proposed merger with Amazon two years prior. The company has cited challenges from international competitors, existing debt obligations, and tariff costs as contributing factors.
Acquisition by Chinese Manufacturer
iRobot is being acquired by its primary manufacturer, Shenzhen Picea Robotics, a company based in China. Picea Robotics has stated that iRobot devices will continue to operate as before. Most Roomba units are produced in Vietnam, leading iRobot to incur import fees under previous U.S. trade policies. The bankruptcy filing indicates that iRobot owes $3.4 million to U.S. Customs and Border Protection in unpaid tariffs. Additionally, the company owes approximately $100 million to Shenzhen Picea Robotics.
Company Origins and Evolution
iRobot was established in 1990 by researchers from the Massachusetts Institute of Technology. Initially, the company developed devices for military applications, archaeological exploration (such as in the Great Pyramid of Giza), and environmental monitoring (like tracking an oil spill in the Gulf of Mexico). Subsequently, iRobot introduced consumer products, including the Roomba, designed for home floor and pool cleaning.
Financial Difficulties and Failed Merger
In recent years, iRobot has faced financial difficulties. The company encountered increased competition from smart vacuum manufacturers, particularly those based in China, which often offered products at lower price points. Amazon's $1.4 billion offer to acquire iRobot was terminated last year following scrutiny from European and U.S. competition regulators. This left iRobot with a $200 million loan, which had been secured to maintain operations during the merger review period.
Recent Performance and Outlook
iRobot has reported financial losses throughout the past year. In its most recent quarter, U.S. revenue decreased by 33%. The company had issued warnings of potential bankruptcy in March, citing concerns related to consumer demand, competitive pressures, and tariffs. The bankruptcy plan involves iRobot transitioning to a private entity under Picea Robotics. Picea Robotics manufactures its own brand of household devices, 3i, and supplies other brands, including Shark and Anker, which produces Eufy vacuums.