The Bankruptcy of the Innovative Company "Roomba" Threatens the Future of Struggling Tech Companies

SadaNews - The announcement of the bankruptcy of iRobot, the owner of the famous Roomba brand, was not just news about a struggling smart vacuum maker, but a broader indicator of a worsening crisis hitting technology companies that had bet on acquisition deals as a last resort.

The story begins with the users themselves. Ruth Horn (76 years old) from Los Angeles bought what she thought was a Roomba device at a discounted price, only to discover it was a poorly performing counterfeit.

Meanwhile, Marcy Lewis (75 years old) from Ohio intentionally chose a cheaper Chinese robotic vacuum during the "Prime Day" sales, but it did not last long.

Although the quality of Roomba products has always distinguished it from the wave of cheap imitations, this did not prevent the company from falling into official bankruptcy announced this week, amid complex pressures where the cheap Chinese competitor was merely one of the reasons, according to a report published by CNBC and reviewed by Al Arabiya Business.

The Lost "Amazon" Deal

One of the crucial factors was the failure of Amazon's acquisition of "iRobot" in 2022 for $1.7 billion, due to regulatory objections, especially in Europe.

The deal, which was viewed as a lifeline for the company, turned into a burden after it was canceled in early 2024.

In a judicial disclosure, "iRobot" revealed that its assets and liabilities range between $100 million and $500 million, with debts of nearly $190 million, including about $100 million owed to its main manufacturer in China and Vietnam, who ultimately ended up owning the company.

Colin Angle, the company's founder and CEO, stated that what happened is deeply disappointing and could have been avoided, considering bankruptcy a tragedy for consumers, the robotics industry, and American innovation.

A Warning for Tech Companies

Experts in mergers and acquisitions believe that what happened to "iRobot" goes beyond just one company.

Christina Minick, a finance professor at Bentley University, considered that the issue represents a harsh lesson in a regulatory environment that has begun to hinder deals that used to be a means of rescuing struggling companies.

Minick believes that blocking Amazon's acquisition removed a viable outlet, leading to the company's sale to a Chinese manufacturing partner, which means the transfer of intellectual property and market share abroad instead of maintaining an independent American competitor.

Europe Under Fire

Although the current U.S. administration suggests a more flexible approach to acquisition deals, the European stance remains strict, as evidenced by recent actions against major companies like "Meta".

This strictness, according to experts, is driving tech giants to seek alternatives, such as acquiring engineering teams or licensing intellectual property instead of buying entire companies, in an attempt to circumvent regulatory scrutiny.

Financial Pressures and Tariffs

Apart from the acquisition file, "iRobot" has suffered from declining revenues, delayed payments to suppliers, and a drop in its credit rating to a very high-risk level before bankruptcy.

U.S. tariffs have also contributed to rising costs, especially since most Roomba devices are manufactured in Vietnam.

Rajini Bhalla, a credit risk analysis expert, states that trade policies were the final blow, turning operational pressures into a real solvency crisis.

For consumer Marcy Lewis, the bankruptcy does not change much in her daily life, but she expresses her disappointment at the transfer of a prestigious American brand to Chinese ownership.

As for the technology industry, analysts believe that Roomba may be the most prominent victim in 2025 of a new global system that is more stringent regarding mergers.

The clearest message, according to experts, is that relying on a major deal as a rescue plan may transform from a dream into a disaster, in a world where regulatory bodies' decisions can dictate the fate of entire companies.