iRobot, the American company that essentially invented the robot vacuum category with its Roomba-branded cleaners, has declared Chapter 11 bankruptcy.
However, the declaration is essentially a legal move. Rather than closing, iRobot has been acquired by Picea Robotics, its Shenzhen, China, manufacturing partner, under a Restructuring Support Agreement (RSA).
As a result, iRobot will “continue operating in the ordinary course, pursue its product development roadmap, and maintain its global footprint,” according to an iRobot statement. “The transaction contemplated under the RSA provides a path forward to enhance financial stability, reduce debt, and support continued innovation across iRobot’s leading portfolio of robotics and smart home devices.”
Gary Cohen, iRobot’s CEO, assured its clients and customers that the company did not anticipate disruption to any of its current operations, including customer programs, global partnerships, supply chain relationships, apps, and ongoing product support.
“Today’s announcement marks a pivotal milestone in securing iRobot’s long-term future,” Cohen asserted. “The transaction will strengthen our financial position and will help deliver continuity for our consumers, customers, and partners. Together, we will work to continue advancing the industry-leading Roomba robots and smart home technologies that have defined the iRobot brand for more than three decades.”
Once the acquisition is officially completed, iRobot will become a private company wholly owned by Picea. Shares of iRobot’s common stock will no longer be listed on Nasdaq or any other national stock exchange, and holders of the company’s common stock will lose their investment.
Seeds of Destruction
One thing that iRobot will not be is American-owned. iRobot’s acquisition by a Chinese company is ironic since the company has spent the last half-decade fending off Chinese competition. In 2022, iRobot started negotiations to be acquired by Amazon for $1.4 billion. iRobot co-founder Colin Angle believed Amazon’s acquisition would enable iRobot to more effectively compete against rising and government-supported Chinese competitors, who Angle believed were capitalizing on his own company’s innovations.
However, in early 2024, the merger was halted by European and American regulators who believed Amazon would then curb robot vacuum competition.
While iRobot was fighting off Chinese competitors, “we faced U.S.-imposed tariffs, which threatened to reduce our ability to invest in R&D, and tied up needed working capital,” Angle fumed at the April 2024 CTA Digital Patriots dinner. “We managed to ultimately achieve tariff relief, but the uncertainty caused by that chaotic trade policy and the delay required for exemption gave the [Chinese] competition an opportunity to gain, maintain momentum, and secure a foothold here in the U.S.”
iRobot subsequently laid off 350 employees, 31% of its workforce. Angle announced he was leaving his own company, accurately predicting that iRobot would be unable to compete effectively on its own.
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