iRobot’s Stock Crash: EU May Block Amazon’s Acquisition Deal

Bad news for iRobot, as the Roomba vacuum cleaner robot manufacturer has seen its shares plummet by up to 56%. The reasons behind this drop are tied to a leaked report indicating that the European Union’s antitrust regulator plans to block Amazon’s acquisition of iRobot.

This news should not come as a surprise. In July 2023, the European Union had warned that it was investigating Amazon’s purchase of iRobot and was already seeking to block the acquisition due to the potential monopoly it could create. The primary concern is that Amazon could provide a favorable position to iRobot in vacuum cleaner robot sales on its platform, as well as gain access to information about other manufacturers and users, creating the perfect customer profile.

Amazon had hoped to close the iRobot acquisition deal for $1.4 billion.

Reports suggest that on Thursday, Amazon was informed that the European Commission, the executive arm of the European Union, would ultimately block the acquisition. The reason is that following the initiation of the investigation, Amazon offered no solutions to the issues raised by the regulator. Amazon had until January 10th as the deadline to address the regulator’s concerns. Specifically, Amazon failed to provide a solution to the potential reduction in competition and the strengthening of its e-commerce dominance.

In light of these reports, iRobot’s shares naturally had to fall, but losing over half their value is a significant blow. It was in August 2022 when Amazon announced its intention to acquire the vacuum cleaner robot manufacturer. The purpose was simple: to add Roomba robots to its portfolio of smart devices, including the voice assistant Alexa, smart thermostats, security devices, and wall-mounted smart displays.

Any potential block would make it the second technology deal to encounter regulatory hurdles in recent weeks. Recently, in December, Adobe was unable to formalize a $20 billion acquisition of design software manufacturer Figma, citing “no clear path” for antitrust approvals in Europe and the UK. As a result, Adobe had to pay $1 billion in compensation.

Roomba’s manufacturer needs to be acquired.

Stiff competition and high prices have rendered Roomba a mere shadow of its former self. In fact, in July 2023, Amazon reduced its purchase offer by 15% after learning about iRobot’s new debt. If Amazon does not acquire iRobot and its shares continue to reach historic lows, it spells trouble for the company’s future.

While British regulators approved Amazon’s acquisition, the European Union has maintained its position that the acquisition would reduce competition in the market. With Amazon offering no alternatives, the European Commission now has until February 14th to approve or reject the deal. Although the outcome may be evident, the official announcement must still be awaited.

The news about iRobot’s stock market crash and the possible blocking of the Amazon acquisition deal by the EU was first reported by El Chapuzas Informático.