Amazon terminates iRobot acquisition due to regulatory hurdles
iRobot announced it is cutting 31% of its workforce
Amazon and iRobot agreed Monday to terminate the planned $1.4 billion acquisition of the vacuum maker after facing hurdles from European antitrust regulators.
The companies said the deal had "had no path" to approval in the European Union.
"This outcome will deny consumers faster innovation and more competitive prices, which we're confident would have made their lives easier and more enjoyable," said David Zapolsky, Amazon senior vice president and general counsel.
Zapolsky also said the "undue and disproportionate regulatory hurdles" only hurts consumers and competition, "the very things that regulators say they're trying to protect."
AMAZON BUYS ROOMBA MAKER IROBOT IN $1.7B DEAL, ITS NEWEST EXPANSION INTO HOME DEVICES
The same day the deal was terminated, iRobot, the company behind the Roomba vacuum, also announced it was cutting 31% of the company's workforce. IRobot said those cuts are part of an operational restructuring plan that's designed to stabilize the company in the current environment.
iRobot vacuum cleaners seen in a Target superstore. (Alex Tai/SOPA Images/LightRocket via Getty Images / Getty Images)
Under the proposed deal, announced in August 2022, Amazon would have acquired iRobot for a revised $51.75 per share, bolstering its position in the smart home market. It originally agreed to $61 per share in an all-cash transaction valued at approximately $1.7 billion, including iRobot's net debt.
The companies had argued that the deal would have allowed Amazon to "invest in continued innovation by iRobot" and would have lowered prices for consumers.
AMAZON'S IROBOT ACQUISITION 'MOST DANGEROUS, THREATENING' IN COMPANY'S HISTORY: RESEARCHER
It was a hard sell for regulators both in the U.S. and the EU.
This picture taken on July 4, 2022, shows the logo of Amazon, a major online shopping company, displayed at Amazon Amagasaki Fulfillent Center in Amagasaki, Hyogo prefecture. ((Photo by KAZUHIRO NOGI/AFP via Getty Images) / Getty Images)
The Competition and Markets Authority, British antitrust regulators, had cleared Amazon’s purchase of the robot vacuum after looking into whether the deal would result in a "substantial lessening of competition" within the United Kingdom.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMZN | AMAZON.COM INC. | 182.50 | +2.65 | +1.47% |
| IRBT | IROBOT CORP. | 12.64 | -0.21 | -1.63% |
However, last summer, the European Commission announced it had opened an in-depth investigation to assess the deal, saying it's "concerned that the transaction would allow Amazon to restrict competition in the market for robot vacuum cleaners and to strengthen its position as online marketplace provider."
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The acquisition was also under review by the Federal Trade Commission, which was also worried about Amazon’s growing market power.
