On Monday, Amazon announced the cancellation of its planned acquisition of iRobot, a vacuum-maker, citing insurmountable obstacles to regulatory approval. The decision followed reports by The Wall Street Journal that the European Union (EU) would not grant regulatory clearance for the deal.
As a consequence of the failed acquisition, iRobot disclosed a significant workforce reduction, with 31% of its employees, approximately 350 people, facing layoffs. Furthermore, Colin Angle, iRobot’s chair and CEO, stepped down from his position with immediate effect.
In response to the news, iRobot’s stock experienced a 10% decline during morning trading. The uncertainty surrounding the deal escalated when the European Commission initiated a probe in July, expressing concerns that the acquisition could potentially lead to anti-competitive practices. The EU suggested that Amazon might use its marketplace dominance to disadvantage iRobot’s competitors, affecting fair competition.
Margrethe Vestager, the European Commission’s executive vice president, stated that the investigation revealed that if the acquisition proceeded, Amazon could impede rivals by limiting access to its online marketplace. Vestager emphasized that such control could stifle competition in the robot vacuum cleaner market, resulting in adverse effects such as higher prices, lower quality, and diminished innovation for consumers.
Expressing disappointment over the failed acquisition, David Zapolsky, Amazon’s senior vice president and general counsel, mentioned in a release that they were saddened the deal could not progress.
In response to the changed circumstances, iRobot outlined strategic adjustments, focusing on margin improvements, reducing research and development spending, and halting work on “non-floorcare” products like air purifiers and robotic lawn mowers.
Colin Angle, in a release, expressed disappointment about the termination of the agreement but asserted iRobot’s commitment to moving forward with a renewed focus on developing innovative home technologies.
As part of the termination agreement, Amazon will pay iRobot a previously agreed-upon $94 million breakup fee. The deal, originally announced in 2022, would have initially valued iRobot at around $1.7 billion. Following the news and prior reports of EU opposition, iRobot’s market capitalization has fallen below $400 million.
In July, iRobot secured a $200 million financing facility from the Carlyle Group to sustain its operations until the Amazon deal concluded.
Amazon declined to provide additional comments beyond the official release. This development adds to the increasing scrutiny of large technology companies by regulators globally, with ongoing inquiries into potential anti-competitive practices. Amazon is currently under investigation by the Federal Trade Commission for its investments and partnerships with AI developers, including Anthropic and OpenAI.
In Europe, regulatory bodies, including Britain’s Competition and Markets Authority and the EU’s European Commission, have intervened in several deals, including Meta’s acquisition of Giphy, Adobe’s terminated acquisition of Figma, Microsoft’s investment in OpenAI, and Microsoft’s purchase of Activision Blizzard.
