The companies said they had entered into a mutual agreement to terminate their announced acquisition agreement. Amazon will pay iRobot a termination fee.
The deal, first announced in August 2022, was part of Amazon’s major push into the smart home robotics market. It would have put the online retailer, which makes its Echo smart speakers and owns Ring home security cameras, directly in competition with robot vacuum maker iRobot’s Roomba devices. But the companies’ plans came under intense scrutiny from EU and U.S. antitrust regulators, who feared the combined company could unfairly restrict other smart home device manufacturers from selling their products on Amazon’s site and marketplace.
European Union competition chief Margrethe Vestager urged the iRobot board and Amazon to reconsider the deal. Her preliminary investigation indicated it would lead to “anti-competitive effects” if approved. She expressed concerns that the combination could lead to higher prices, lower quality, or fewer product innovations in the sector. As the owner of both brands, she also feared that the company might limit or delist rival robot vacuums from its site, reduce their visibility, or make it more expensive for competitors to advertise on the site.
Vestager and the other EU antitrust officials who have investigated the deal have yet to make a final decision, but it looks as though they are set to block it. The two firms face steep financial penalties, including a $94 million termination fee for iRobot and hundreds of job cuts.
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iRobot, which also owns the Spinbot mopping robot, is in the middle of a significant restructuring plan to cut costs. The company has posted losses each quarter since Q4 of 2021 and racked up about $550 million in cumulative losses. The company also took on $200 million in debt last year. On Monday, it announced that founder Colin Angle would step down as CEO of the Roomba robot vacuum manufacturer and that it would cut about 31% of its workforce — 350 jobs, or nearly a third of its global headcount. The company’s executive vice president and chief legal officer, Glen Weinstein, will serve as interim CEO.
In a statement, iRobot had developed a “comprehensive operational restructuring plan that includes reducing capital expenditures and focusing on profitability and key growth initiatives.” It said it would continue to build thoughtful robots that customers worldwide love.
iRobot’s shares dropped 15% after the announcement. Investors appeared to be worried the company had spent too much money in its bid to become part of Amazon’s connected home empire. The stock had lost half its value in the past two weeks when investors began to fear EU regulators might block the deal.