The regulatory opposition, especially from the European Union, has forced Amazon to scrap its planned acquisition of iRobot, the company that makes the Roomba vacuum. The contract, which was first disclosed in August 2022, had a $1.4 billion estimated value. However, the European Commission expressed worries that the combination may lessen market competition for robot vacuum cleaners, which might have caused the agreement to fall through.
Due to the termination of the agreement, Amazon will reimburse iRobot a termination fee of $94 million.
Additionally, iRobot has revealed a massive reorganization plan that calls for the termination of about 350 workers, or about 31% of the company.
Colin Angle, the iRobot CEO and Chairman of the Board of Directors, will step down. The business has named Glen Weinstein, the EVP and Chief Legal Officer, as the new interim CEO.
iRobot suffered immediate financial consequences from the deal’s demise, as its shares fell sharply in trading.
Additionally, a 25% decrease in revenue from the previous year is anticipated for FY23, along with an estimated $200 million adjusted operating deficit.
Furthermore, iRobot intends to cut the size of its office space and its expenditures for research and development, putting a halt to work on non-floorcare products including robotic lawn mowing, air purification, and teaching.
David Zapolsky, SVP and General Counsel at Amazon expressed unhappiness with the result, saying that barriers to competition and regulations deter entrepreneurs and hurt customers.
The company had anticipated that quicker innovation and more affordable prices in the consumer robotics sector would result from the acquisition.
Formal opposition to the acquisition from the European Commission was part of a larger antitrust investigation that also included claims that Amazon gives preference to its items over those of third parties.
The choice to thwart the merger is perceived as a protest against Amazon’s increasing dominance in the market.