Amazon, iRobot abandon merger in face of EU opposition

AMAZON and robot vacuum maker iRobot said Monday (Jan 29) they would end their plans to merge in the face of opposition from EU antitrust regulators.

iRobot announced a significant restructuring plan to reduce costs and said it would cut about 31 per cent of its workforce, or 350 jobs. The company also said founder Colin Angle has stepped down as its CEO.

Angle said given the current challenges, he and the board “mutually decided that iRobot will be better served by a new leader with turnaround experience.” Amazon said its proposed US$1.4 billion acquisition of iRobot had no path to regulatory approval in the European Union. Reuters reported earlier this month the deal would be blocked by European Commission antitrust regulators and that its main concerns were that Amazon may thwart iRobot rivals on its online marketplace, especially 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, was pushing to expand its stable of smart home devices as well as expanding the e-commerce giant’s virtual healthcare.

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” said David Zapolsky, Amazon’s general counsel. “We’re believers in the future of consumer robotics in the home and have always been fans of iRobot’s products,” he added in a statement.

Bedford, Massachusetts-based iRobot said it expects to report full-year 2023 revenue of US$891 million, a 25 per cent reduction and a loss of between US$265 and US$285 million. Under the terms of the merger agreement, Amazon will pay iRobot a US$94 million termination fee.

Amazon has had a mixed record with competition regulators in recent years, completing a deal for healthcare provider One Medical and MGM’s movie catalogue.

But it faces a lengthy court battle in a Seattle federal court with the FTC over accusations the company uses illegal strategies to boost profits at its online retail empire, including an algorithm that allegedly pushed up prices by more than US$1 billion.

iRobot shares fell 18.5 per cent in trading Monday before the market opened. Since first reports the deal might be blocked by EU regulators two weeks ago, iRobot shares have fallen by half.

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Amazon has not offered remedies to EU concerns over iRobot deal

Critics opposed the deal, saying it would strengthen Amazon.com’s already powerful position in smart home devices. REUTERS