iRobot Acquisition by Amazon Cancelled Due to Regulatory Concerns
WASHINGTON: Amazon and robot vacuum cleaner maker iRobot on Monday said they are ending their merger plan amid opposition from EU competition authorities.
iRobot announced a major restructuring plan to cut costs and said it would cut about 31 percent of its workforce, or 350 jobs. The company also said that founder Colin Angle has stepped down as CEO.
Angle said that given the current challenges, he and the board “mutually decided that iRobot would be better served by a new leader with turnaround experience.”
Amazon said its proposed $1.4 billion purchase of iRobot had no path to regulatory approval in the European Union. Reuters reported earlier this month that the European Commission’s competition authorities would block the deal and that its main concern was that Amazon could block iRobot’s competitors in its online markets, particularly in France, Germany, Italy and Spain.
Amazon announced the deal in August 2022. The world’s largest online retailer, which already owns Alexa and Ring, wanted to expand its stable of smart home devices and expand the online shopping giant’s virtual healthcare.
“We are disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon’s general counsel. “We believe in the future of consumer robotics in the home and have always been fans of iRobot products,” he added in a statement.
Bedford, Mass.-based iRobot said it expects to report full-year 2023 revenue of $891 million, a 25 percent decline, and a loss of $265 million to $285 million. Under the terms of the merger agreement, Amazon will pay iRobot a $94 million termination fee.
Amazon has had a checkered record with competition regulators in recent years and has signed deals for the movie catalog of healthcare provider One Medical and MGM.
But it faces a lengthy legal battle in federal court in Seattle with the FTC over allegations that the company uses illegal strategies to boost profits in its e-commerce empire, including an algorithm that allegedly inflated prices by more than $1 billion.
Critics opposed the deal, saying it would strengthen Amazon.com’s already strong position in smart home devices.
