“Amazon’s Bid to Acquire iRobot Comes to an End due to European Regulatory Barriers”
After facing hurdles with European regulators, Amazon has decided to end its pursuit of iRobot, the manufacturing company known for its robotic vacuum cleaners.
The two companies have issued a joint statement terminating the previously announced acquisition agreement. The deal would have seen Amazon acquiring iRobot for approximately $1.7 billion. However, Amazon and iRobot have cited the “lack of a path to regulatory approval in the European Union” as the deciding factor in their mutual decision to abandon the acquisition.
As a result of the terminated bid, iRobot will receive a $94 million termination fee from Amazon. However, the failed acquisition will also lead to an “operational restructuring plan” by iRobot, which involves laying off about 31% of the company’s workforce.
After experiencing net losses totaling about $500 million, iRobot’s market capitalization now stands at under $400 million. Colin Angle, iRobot’s former chairman and CEO, has stepped down from his roles, and the company has appointed an interim CEO to lead the implementation of the restructuring.
iRobot anticipates saving costs through various measures such as renegotiating terms with manufacturing partners, offshoring, and consolidating sales and marketing expenses. However, the company also expects the restructuring to incur costs of $12-$13 million, primarily for severance and expenses related to layoffs, over the next two quarters.
Amazon’s pursuit of iRobot faced regulatory scrutiny from multiple entities, including the European Commission and the U.S. Federal Trade Commission. Concerns were raised about the potential antitrust implications and how the deal might affect Amazon’s influence in the smart home market.
The termination of the acquisition also spells changes for iRobot’s future plans, including the pause of work on non-floorcare innovations such as robotic lawn mowing and air purification.
With the termination of this high-profile acquisition, both Amazon and iRobot will need to reevaluate their strategies and future business endeavors in the fast-growing robotics and home automation sectors.
