In a significant market shakeup, IRobot shares plunged by more than 30% during early Friday trading following reports that the European Union’s antitrust regulator is contemplating blocking Amazon’s proposed $1.4 billion acquisition of the Roomba vacuum maker.
Citing sources, Reuters reported that the EU regulator is considering a potential veto, a move that could establish a higher threshold for future Amazon acquisitions of online competitors. This news was initially disclosed by the Wall Street Journal.
Amazon, a U.S. tech giant, failed to provide solutions to address the regulator’s concerns about the deal’s impact on competition and its potential to reinforce Amazon’s dominance in the e-commerce sector. The deadline for proposed remedies was January 10.
The proposed acquisition of IRobot, announced in August 2022, aimed to enhance Amazon’s smart device portfolio, including products like the Alexa voice assistant, smart thermostats, security devices, and wall-mounted smart displays.
The potential blockade of the deal could have adverse effects on IRobot’s future as an independent entity, according to analysts. Gil Luria, an analyst at D.A. Davidson & Co, remarked, “Regulators have little concern for iRobot’s health and financial outlook. They believe they are preventing harm to consumers by not allowing big technology companies to acquire businesses and make those categories less competitive.”
If the deal is rejected, it would mark the second recent instance of a tech deal facing regulatory challenges. In December, Adobe abandoned its $20 billion deal for design software maker Figma, citing a lack of a clear path for antitrust approvals in Europe and the UK.
Amazon had previously reduced its offer by approximately 15% in July after IRobot incurred additional debt. In the same month, the EU cautioned Amazon that the deal, though cleared by UK regulators, could potentially diminish competition.
Since the announcement of the deal, IRobot shares have experienced a staggering loss of over 66%, currently trading at $16.27—less than a third of the amended price of $51.75 per share that Amazon had agreed to pay. The European Commission has until February 14 to make a final decision on whether to approve or reject the acquisition.
