Amazon calls off $1.7 billion iRobot buy, blames regulators
Retailer steps back from Roomba-maker and 350 staff will have to step back from a job
Amazon's $1.7 billion bid to buy iRobot is off, and while Jeff Bezos's business faces a termination fee, almost a third of the vacuum cleaner maker's staff face termination of an altogether different nature.
Amazon SVP and general counsel David Zapolsky wasted no time pointing the finger at regulators, whom he said were discouraging to plucky entrepreneurs like Amazon.
Zapolsky said: "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."
Following the termination of the deal, iRobot announced restructuring plans aimed at generating between $80 million and $100 million of savings and cutting R&D expenses by approximately $20 million year on year. The company said around 350 employees would be leaving, representing about 31 percent of the workforce as it stood on December 30, 2023. The company has appointed Jeff Engel as Chief Restructuring Officer to oversee the changes.
iRobot's CEO, Colin Angle, is also stepping down with immediate effect.
iRobot, which makes the Roomba vacuum cleaner, has been having a torrid time of it in recent years as revenue plummeted. In November 2023, it announced revenue for the third quarter of 2023 of $182 million, compared to $278.2 million for the same period of the earlier year. It also entered into a $200 million financing facility "to fund its ongoing operations."
The robomaker will be paid a $94 million termination fee by Amazon, approximately 20 percent of which will go to its financial advisors.
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Daniel Friedlaender, SVP and head of the Computer & Communications Industry Association Europe, expressed disappointment with the outcome and said: "The size or profitability of a company should not be used as an excuse by EU regulators to argue it cannot innovate in a completely different sector. In this case, for example, there are simply not valid reasons to prevent a firm from acquiring a struggling producer of domestic appliances.
"Europe cannot and should not create an environment where companies are not allowed to invest in, or acquire, companies in related sectors."
He added: "Neither competition law, nor the Digital Markets Act, should be used to artificially limit or restrict healthy markets or legitimate acquisitions."
In a statement sent to The Reg, European Commission executive veep Margrethe Vestager, in charge of competition policy, said:
"We looked closely at the dual role of Amazon as platform operator and market participant, and the implications of Amazon merging with the owner of a very successful product for which Amazon is already an important sales channel.
"Our in-depth investigation preliminarily showed that the acquisition of iRobot would have enabled Amazon to foreclose iRobot's rivals by restricting or degrading access to the Amazon Stores.
"We also preliminarily found that Amazon would have had the incentive to foreclose iRobot's rivals because it would have been economically profitable to do so. All such foreclosure strategies could have restricted competition in the market for robot vacuum cleaners, leading to higher prices, lower quality, and less innovation for consumers." ®