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Amazon Cuts iRobot Offer Price to $1.4B

Amazon Cuts iRobot Offer Price to $1.4B

Amazon will now pay a lower price for iRobot after the Roomba vacuum maker entered a $200 million financing facility, knocking down its stock price by about 10% on Tuesday.

According to Bloomberg, the financing arrangement represents a senior secured loan. Moreover, asset manager Carlyle Group, under its private credit arm, provided the loan, which carries an approximately 14% floating interest rate.

The companies had originally agreed that Amazon would pay $61 per share, but it has now been revised to $51.75. The 15% price reduction will bring the total cost down from $1.7 billion to roughly $1.4 billion, including debt.

The reason is the persistent antitrust headwinds companies have suffered both by US and UK regulators, which appears to have hit iRobot’s revenue stream and consequently the need for a credit facility.

Amazon said the price change is expected to be largely offset by the planned increase in iRobot’s net debt under the new financing facility, which is to fund ongoing operations.

“iRobot is taking on new financing that we believe is sufficient to support our operations in a hyper-competitive environment and meet our liquidity needs as well as pay off iRobot’s existing debt,” iRobot chairman and CEO Colin Angle said.

iRobot was founded in 1990 by M.I.T. roboticists. It is best known for its robot vacuum, which it introduced in 2002.

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About Joe Palmisano

Joe Palmisano is Editorial Director for Connect Money, where he brings nearly three decades experience of market insights as a financial journalist, analyst and senior portfolio manager for leading financial publications, advisory firms, and hedge funds. In his role as Editorial Director, Joe is responsible for the selection of content and creation of daily business news covering the financial markets, including Alternative Assets, Direct Investment and Financial Advisory services. Before joining Connect Money, Joe was a financial journalist for the Wall Street Journal, regularly publishing feature stories and trend pieces on the foreign exchange, global fixed income and equity markets. Joe parlayed his experience as a financial journalist into roles as a Senior Research Analyst and Portfolio Manager, writing daily and weekly market analysis and managing a FX and US equity portfolio. Joe was also a contributing writer for industry magazines and publications, including SFO Magazine and the CMT Association. Joe earned a B.S.B.A. in Finance from The American University. He holds the Chartered Market Technician (CMT) designation and is a member of the CFA Institute.