In a joint announcement on Monday, tech giant Amazon and robot vacuum manufacturer iRobot revealed their decision to scrap their proposed merger following resistance from European Union antitrust regulators.
Amazon’s ambitious $1.4 billion acquisition bid for iRobot faced insurmountable challenges as EU antitrust regulators voiced concerns over potential market dominance issues. Reuters had previously reported that the European Commission was poised to block the deal, expressing worries that Amazon might stifle competition in iRobot’s sector on its online marketplace, particularly in key European markets such as France, Germany, Italy, and Spain.
David Zapolsky, Amazon’s General Counsel, expressed disappointment over the unsuccessful merger, emphasizing Amazon’s belief in the future of consumer robotics in households and their admiration for iRobot’s products. The proposed acquisition was part of Amazon’s strategy to expand its array of smart home devices and further establish its presence in virtual healthcare, complementing its existing holdings like Alexa and Ring.
In response to the merger’s collapse, iRobot unveiled a substantial restructuring plan aimed at cost reduction. The company plans to slash approximately 31% of its workforce, amounting to 350 jobs. Furthermore, iRobot founder Colin Angle has stepped down from his role as CEO. Angle cited the current challenges faced by the company as the reason for this decision and expressed the mutual agreement between him and the board that a new leader with turnaround experience would better serve iRobot’s interests.
As a result of the terminated merger, iRobot anticipates reporting a 25% reduction in full-year 2023 revenue, totaling $891 million, accompanied by a projected loss ranging from $265 to $285 million. In accordance with the terms of the initial merger agreement, Amazon will pay iRobot a termination fee of $94 million.
The development marks a setback for both companies, with iRobot reevaluating its strategy in the wake of the failed merger, and Amazon losing out on the opportunity to enhance its presence in the rapidly expanding market of consumer robotics.