iRobot Shares Plummet as EU Antitrust Watchdog Plans to Block Amazon’s Acquisition
Shares of iRobot, the maker of Roomba robot vacuums, experienced a significant drop of over 33% in extended trading on Thursday. This sudden decline came after reports emerged that the European Union’s antitrust watchdog intends to block Amazon’s planned acquisition of iRobot. The Wall Street Journal revealed that the European Commission had a meeting with Amazon representatives to discuss the deal, and it was indicated that the acquisition would likely be rejected.
While Amazon declined to comment on the matter, a representative from the European Commission did not immediately respond to a request for comment. As a result of this news, Amazon’s stock also fell slightly in extended trading.
The announcement of Amazon’s intention to acquire iRobot came in August 2022, with a proposed all-cash deal valued at $1.7 billion, offering $61 per share. However, the European Commission, known as the European Union’s top antitrust enforcer, initiated an in-depth probe into the purchase last July. The group expressed concerns about the acquisition, stating that Amazon’s actions could impede iRobot’s rivals from competing on its online marketplace. The EC argued that Amazon might delist or reduce the visibility of competitors’ products in search results or other areas.
The European Commission is expected to make a ruling on the deal by February 14th. Politico reported earlier this month that Amazon does not plan to offer concessions to address the concerns raised by the group regarding the acquisition. It is worth noting that the deal is still under review by the U.S. Federal Trade Commission, while the U.K.’s Competition and Markets Authority previously stated in June that the acquisition would not significantly diminish competition in the U.K.
This setback for iRobot and Amazon highlights the challenges faced by tech giants when seeking to expand their reach through acquisitions. The scrutiny from regulatory bodies like the European Commission is a testament to the importance of maintaining fair competition in the marketplace.
The potential rejection of the acquisition by the European Commission poses a significant obstacle for Amazon’s plans to enter the smart vacuum market. iRobot’s Roomba vacuums have gained popularity and established a strong presence in households worldwide. With this acquisition, Amazon aimed to tap into the growing demand for smart home devices and further expand its ecosystem of connected products.
However, if the deal is indeed blocked, both iRobot and Amazon will need to reassess their strategies moving forward. iRobot may have to explore alternative partnerships or avenues for growth, while Amazon might need to consider other options to enter the smart home market.
The outcome of this acquisition will not only impact the companies involved but also have broader implications for the tech industry as a whole. It serves as a reminder that even the largest players in the market are subject to regulatory scrutiny and must navigate complex antitrust regulations.
As investors anxiously await the European Commission’s ruling, the future of iRobot and Amazon’s plans for expansion hangs in the balance. The decision will undoubtedly shape the trajectory of these companies and potentially influence the landscape of the smart home industry.
