Dec 14 (Reuters) – Roomba vacuum cleaner maker iRobot (IRBT) filed for bankruptcy protection on Sunday and said it would go private after being acquired by its main maker Picea Robotics.
The company in March raised concerns about continuing to operate and filed for Chapter 11 protection in Delaware Bankruptcy Court to combat growing competition from lower-price rivals and new U.S. tariffs.
iRobot will have total revenue of about $682 million in 2024, but its profits have been eroded by competition from Chinese rivals such as Ecovacs Robotics. iRobot remains dominant in key markets such as the United States and Japan, but competition has forced it to lower prices and invest heavily in technology upgrades, according to bankruptcy court documents.
New U.S. tariffs have also hurt the company, particularly a 46% tariff on imports from Vietnam, where iRobot makes vacuum cleaners for the U.S. market. According to iRobot’s court filings, the tariffs will increase the company’s costs by $23 million in 2025 and make future planning more difficult.
The company was the target of a $1.4 billion acquisition by Amazon but was thwarted, leaving it with about $190 million in debt.
The debt stems from a loan iRobot took out to refinance its business in 2023, when a competition investigation in Europe stalled the Amazon (AMZN) deal.
The Chinese manufacturer acquired iRobot’s debt from a group of investment funds managed by The Carlyle Group after the Amazon deal fell apart and iRobot failed to make timely payments to Picea, according to court documents.
The stock fell 83% in premarket trading on Monday.
Under iRobot’s bankruptcy plan, Picea will take 100% of the company and cancel the remaining $190 million in 2023 loans, as well as an additional $74 million in debt iRobot owes Picea under the company’s manufacturing agreement.
Other creditors and suppliers will be paid in full, according to iRobot’s bankruptcy court filing.
iRobot said the bankruptcy does not expect to disrupt its application functionality, customer programs, global partners, supply chain relationships or product support.
The loss-making company was valued at $3.56 billion in 2021, driven by pandemic-driven demand, but is now valued at about $140 million, according to data compiled by London Stock Exchange Group (LSEG).
iRobot was founded in 1990 by three MIT robotics experts. The company initially focused on defense and space work before launching the Roomba robot vacuum in 2002.
Roomba was an immediate success, capturing about 42% of the U.S. robot vacuum market and 65% in Japan, according to the company.
