iRobot has signed a definitive agreement to acquire the iRobot-related distribution business of privately-held Sales On Demand Corporation (SODC) based in Tokyo, Japan. The acquisition is expected to close in April 2017.

The acquisition will better enable iRobot to maintain its leadership position and accelerate the growth of its business in Japan through direct control of pre- and post-sales market activities including sales, marketing, branding, channel relationships and customer service.

SODC has been iRobot’s exclusive distribution partner in Japan since 2004 and is well respected by top channel partners. The SODC team has been instrumental in establishing iRobot as the leading consumer robotics brand among Japanese consumers and maintaining significant market share in an increasingly competitive region.

Japan is a key strategic country for iRobot, given its status as the largest consumer robotics market outside of North America. iRobot will appoint a new president & general manager for Japan who will report directly to iRobot’s COO Christian Cerda, and assume day-to-day operational responsibility for all market activities in Japan.

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“Forward integration in Japan is a strategic step for iRobot as a leading global consumer technology company. The Japanese distribution model served us well in establishing our initial presence and brand in the region, catapulting iRobot to the market leading position. As the dynamics of the robotic floor care segment evolve in Japan, we believe iRobot itself is better positioned to drive increased adoption and continue market leadership in that region. We are honored to have the SODC distribution team join the iRobot family as we take the next step on our journey,” said Colin Angle, chairman and CEO of iRobot.

iRobot will acquire the business for a cash amount equal to the book value of the acquired assets at close, primarily inventory, estimated to be between $14M-$16M, subject to exchange rates in effect on the date of acquisition. The acquisition is expected to contribute incremental revenue of approximately $20-25 million in 2017 and to expand gross margin despite the required one-time, inventory fair value accounting adjustment.

On a GAAP basis, iRobot expects the acquisition to be between $0.25-0.35 dilutive in 2017, subject to final purchase price accounting adjustments, one time charges and acquisition costs. The acquisition will result in incremental revenue, gross margin and profit in 2018 and beyond. We will provide more information on the acquisition impact on our financials in conjunction with our earnings call in February.