Amazon and iRobot have abandoned their plans for a $1.4 billion merger due to opposition from both EU and US antitrust regulators, according to a Reuters report. The decision was influenced by concerns raised by EU antitrust chief Margrethe Vestager, who revealed that an in-depth investigation indicated the acquisition “would have enabled Amazon to foreclose iRobot’s rivals by restricting or degrading access to Amazon stores.”
Expressing disappointment, Amazon’s General Counsel, David Zapolsky, stated, “We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products.”
In response to the collapsed merger, iRobot has announced a significant restructuring plan, intending to reduce costs. As part of this plan, about 31% of iRobot’s workforce, equivalent to 350 jobs, will be cut. Founder Colin Angle has also stepped down as the CEO of the Roomba robot vacuum manufacturer, with both Angle and the board mutually agreeing that a new leader with turnaround experience would better serve iRobot amidst current challenges.
The termination of the merger deal follows concerns raised by EU and US antitrust regulators about potential anti-competitive practices. Vestager explained that the preliminary investigation suggested adverse effects on competition if Amazon acquired iRobot, including the possibility of delisting rival robot vacuum cleaners, reducing their visibility, or raising advertising costs for competitors on Amazon’s marketplace, especially in key European markets.
The Federal Trade Commission (FTC) in the US was also set to reject the deal, planning to recommend a legal challenge to block the acquisition before the companies officially abandoned it.
While expressing disappointment over the failed deal, Amazon, a significant player in the market, will face no financial implications. In contrast, iRobot is expected to report a 25% reduction in full-year 2023 revenue, amounting to $891 million, with an expected loss between $265 and $285 million. According to the terms of the merger agreement, Amazon will pay iRobot a termination fee of $94 million. Following the news, iRobot shares experienced a 7.2% drop in afternoon trading on Monday, continuing a downward trend since the EU regulators’ initial reports about potential blocks two weeks ago, while Amazon shares saw a rise of nearly 1%.
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