Amazon‘s $1.4 billion acquisition of iRobot has been canceled, the two companies announced today.
The deal would have allowed the e-commerce giant to “invest in continued innovation by iRobot and support iRobot in lowering prices on products customers already love” said a statement released by both companies.
The collapsed acquisition, which was originally signed in August 2022, is blamed on there being “no path to regulatory approval in the European Union.” Alongside the announcement, the maker of the Roomba confirmed it was laying off around 350 employees as a result, which is roughly 31% of its entire workforce. One of the first casualties is believed to be CEO and co-founder, Colin Angle, who is stepping down.
David Zapolsky, Amazon SVP and General Counsel said: “We’re disappointed that Amazon’s acquisition of iRobot could not proceed.
“We’re believers in the future of consumer robots in the home and have always been fans of iRobot’s products, which delight consumers and solve problems in ways that improve their lives. This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable.
“Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from other countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics. Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition – the very things that regulators say they’re trying to protect.”
Colin Angle said: “The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better, and that our customers around the world love.”
Amazon will pay a $94 million termination fee to iRobot, which will be used to help pay off a $200 million loan it took out last year.
What EU regulations led to the deal collapsing?
Last November, the European Commission said it believed the deal could potentially restrict competition in the robot vacuum cleaner market. Several of iRobot’s competitors sell their products on Amazon, which led to regulators’ concerns that Amazon could delist or reduce the visibility of rival products, subsequently restricting competition and leading to higher prices, lower quality and less innovation for consumers.
Regulators gave Amazon until January 10th to convince them to let the deal be signed off, but the deadline passed without them offering any concessions. The deal had already received the green light from the UK’s competition regulator in June 2023 but was ultimately unable to get the European Commission to follow suit.
Featured Image: Photos by Onur Binay and Christian Wiediger on Unsplash
Source: ReadWriteWeb
