Instead of reaching a deal with European regulators, Amazon abandoned a $1. 7 billion deal to buy iRobot, sending shares in vacuum cleaner maker Roomba down about 7%.
EU regulators had offered Amazon the chance to make changes to address concerns that the deal would be anti-competitive, but the company “did not see any path to regulatory approval in the European Union,” as it stated on Monday. announcing that he would terminate the agreement. agreement.
European regulators had argued that the deal would hurt other makers of automatic vacuum cleaners, especially if Amazon prioritized Roomba on its website. Amazon responded that hindering the deal was “undue and disproportionate” and would discourage business owners. The tech giant will pay iRobot a termination fee of $94 million.
“These results will deprive consumers of faster innovation and more competitive prices, which would have made their lives less difficult and more enjoyable,” David Zapolsky, Amazon’s senior vice president and general counsel, said in a statement.
iRobot inventory has plummeted from a 40% drop following a Wall Street Journal report this month, prompting other people familiar with the matter who said European festival regulators had informed Amazon they would block the agreement. Following Monday’s announcement, iRobot inventories are down 60% so far this year.
Colin Angle, iRobot’s cofounder, chairman, and CEO, also stepped down on Monday as the company prepared to lay off 350 people, or about 31% of its workforce. Its executive vice president and chief legal officer, Glen Weinstein, will serve as interim CEO.
Although the company had been profitable every year since it went public in 2005, it started posting losses every quarter since Q4 of 2021, racking up more than $550 million in cumulative losses since then. The company was forced to take on $200 million in additional debt last year, which cut the value of the overall deal by 15%.
Angle said the news of the failed merger was “disappointing” but that the company would recover.
Angle said in a statement: “iRobot is now looking to the long term with the purpose and commitment to continue building thoughtful robots and smart home inventions that make life better and that our consumers around the world love. »