Jan 29th, 2024 – In a surprising turn of events, Amazon has decided to abandon its planned acquisition of iRobot, a renowned vacuum-maker company, known for its Roomba devices; this move comes after both companies acknowledged that obtaining regulatory approval for the deal was an insurmountable challenge.
Alongside this announcement, iRobot disclosed plans to lay off approximately 31% of its workforce, equating to around 350 employees, and simultaneously, Colin Angle, iRobot’s Chair and CEO, has stepped down with immediate effect. Following this news, iRobot’s stock experienced a 10% decline during morning trading.
The uncertainty surrounding the fate of the deal intensified when The Wall Street Journal reported that the European Union was unlikely to grant regulatory approval. Indeed, in July, the European Commission initiated an investigation, expressing concerns that the acquisition might result in anti-competitive practices: the commission feared that Amazon could hinder iRobot’s competitors from effectively participating in its online marketplace, manipulating search results or diminishing the visibility of rival products. Margrethe Vestager, the European Commission’s executive vice president, stated that their preliminary investigation revealed the potential for Amazon to stifle iRobot’s rivals, leading to higher prices, lower product quality, and reduced innovation for consumers.
Expressing disappointment, David Zapolsky, Amazon’s senior vice president and general counsel, said, “We’re disappointed that Amazon’s acquisition of iRobot could not proceed.”
As part of the terminated deal, Amazon will pay iRobot a pre-agreed breakup fee of $94 million. Initially valued at around $1.7 billion, iRobot’s market capitalization now stands at under $400 million following the EU’s anticipated opposition to the acquisition.
iRobot outlined its upcoming strategy, emphasizing margin improvements, reduced spending on research and development, and a pause on non-floor care products, including air purifiers and robotic lawn mowers.
This development reflects the increasing regulatory scrutiny on large technology companies worldwide, aiming to prevent anti-competitive behavior and ensure fair market practices in the tech industry.
Author: Ilaria Savignoni