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Amazon has scrapped its $1.45bn acquisition of Roomba maker iRobot as EU regulators prepared to block the transaction over competition concerns, the US tech giant said on Monday.
“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon’s senior vice-president, in a statement on Monday. “This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable.”
EU antitrust regulators raised a formal objection to the deal last year, warning the transaction would restrict competition by allowing the online retail giant to reduce the visibility of rival robot vacuum cleaners on the ecommerce site. That procedural step was seen as a precursor to Brussels formally blocking the deal, with a deadline for reaching a final decision set for February 14.
At the same time as abandoning the deal, iRobot announced a series of management changes, including the departure of its co-founder and long-standing chief executive Colin Angle and a restructuring that will cut about 350 employees, almost a third of its staff. Revenues at iRobot fell by 25 per cent last year to $891mn, it said on Monday.
“We are disappointed with the company’s 2023 performance — but our focus turns now to the future,” said Andrew Miller, who will replace Angle as iRobot’s chair. Glen Weinstein, iRobot’s executive vice-president and chief legal officer, has been appointed interim chief executive.
Amazon — which operates in a wide array of sectors from ecommerce to cloud computing, video streaming and groceries — has for some time drawn the attention of competition regulators in the US, UK and EU.
The US Federal Trade Commission filed a sweeping antitrust lawsuit against the company in September, alleging that it was using its monopoly power to hurt consumers, rivals and sellers.
Amazon lowered its offer to $51.75 a share in July last year, down from an initial $61 a share, after the maker of autonomous vacuum cleaners took on new debt.
Shares were recently trading at $16.99, down 3.4 per cent, in pre-market trading, with investor sentiment turning on the company over poor financial results and concern that global regulators might block the takeover.
The UK’s Competition and Markets Authority cleared the transaction in June after it concluded that Amazon had limited financial and strategic incentives to undermine smaller competitors. The FTC was still examining the transaction before the termination of the deal.
People familiar with Amazon’s thinking argued that the failure of iRobot’s deal would raise concerns about incentives created in Europe for start-ups, whose innovation could make them eventual acquisition targets by larger companies.
Regulators have been examining more closely other Big Tech acquisitions amid concerns that the deals are a way to kill competitors before they become too big and a threat to their businesses.
Antitrust investigators have been accused of being too permissive in years gone by when they waived deals, such as Facebook’s acquisition of Instagram and WhatsApp, and Google’s acquisition of Fitbit.
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