Amazon.com has abandoned plans to acquire iRobot, the maker of the Roomba robot vacuum cleaner, for $1.4 billion (approximately 207 billion yen). The acquisition plan was threatened to be blocked by competition authorities in the European Union.
The cancellation of the deal underscores the intense pressure Amazon faces to prove its actions will not stifle competition. The company is gaining influence in multiple sectors, including retail, cloud computing, and entertainment. On the other hand, by abandoning the acquisition, Amazon will be spared the task of stemming losses from iRobot, which has suffered in recent years.
iRobot has announced that it will embark on a restructuring plan that will involve the reduction of approximately 350 people, or 31% of its workforce, and will also see the retirement of CEO Colin Angle. iRobot shares plunged 19% on the U.S. stock market on the 29th, hitting their lowest price since 2009.
If the plan is canceled, Amazon will have to pay a $94 million penalty to iRobot.
Antitrust enforcement authorities in Europe and the United States are anxious to prevent big U.S. tech companies from acquiring startups that would nip competition in the bud.
Last week, Amazon met with antitrust officials at the Federal Trade Commission (FTC), said the people, who asked not to be identified because the information is private. The executives reportedly mentioned the possibility of filing a lawsuit against Amazon over the acquisition of iRobot. Amazon executives and the company’s lawyers were scheduled to meet with three FTC commissioners this week to finalize the deal, people familiar with the matter said.
Amazon’s move to cancel its acquisition plan and pay a penalty follows the cancellation of a merger agreement between U.S. software makers Adobe and Figma. Adobe and Figma withdrew their proposed merger in December last year, following a joint assessment that there was no clear path to receiving the necessary regulatory approvals from the European Commission and the Competition and Markets Authority (CMA). Adobe said it would pay Figma a $1 billion penalty.
“This result deprives consumers of accelerated innovation and more competitive prices,” David Zapolsky, Amazon’s senior vice president and general counsel, said in a statement. “Excessive regulatory hurdles discourage entrepreneurs who see acquisitions as a path to success, hurting consumers and the competitive environment, which is exactly what regulators are trying to protect. It’s nothing more than a statement.”
“From a financial perspective, this transaction is not material to Amazon’s sales or profits,” said Poonam Goyal, senior analyst at Bloomberg Intelligence. He added that the cancellation of the acquisition plan “reinforces our view that large technology companies will have a difficult time closing acquisitions given the current regulatory landscape in the US and Europe.”
Original title:Amazon Drops iRobot Deal; Roomba Maker Cuts 31% of Staff (1)(excerpt)
(Updates stock price information and adds paragraphs from 5th onwards)
2024-01-29 13:40:51
#Amazon #abandons #iRobot #acquisition #plan #authorities #warn
