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Amazon and robot vacuum maker iRobot have abandoned their plans to merge due to opposition from EU antitrust regulators.
In response, iRobot has announced a significant restructuring plan to reduce costs, involving a workforce reduction of approximately 31%, equivalent to 350 jobs. Additionally, iRobot’s CEO, Colin Angle, has stepped down.
Regulatory Hurdles and Amazon’s Acquisition:
Amazon’s proposed $1.4 billion acquisition of iRobot faced challenges in gaining regulatory approval in the European Union.
The European Commission antitrust regulators expressed concerns that the deal could harm competition, particularly in France, Germany, Italy, and Spain.
The deal, announced by Amazon in August 2022, aimed to expand the company’s presence in smart home devices and virtual healthcare.
European Commission’s Antitrust Concerns:
Earlier reports had indicated that the European Commission would block the merger, citing concerns that Amazon’s ownership of iRobot could lead to anti-competitive practices on its online marketplace.
The potential threat to iRobot’s rivals was a key issue, contributing to the regulatory opposition to the deal.
Amazon’s Response and Disappointment:
Amazon expressed disappointment over the failure of the acquisition, stating that the deal had no path to regulatory approval in the European Union.
The company emphasized its belief in the future of consumer robotics in the home and its admiration for iRobot’s products.
Despite the setback, Amazon remains committed to developing smart home devices.
Critics’ Opposition and Strengthening Amazon’s Position:
Critics of the proposed merger had raised concerns about Amazon’s already dominant position in the smart home devices market.
Opponents argued that the deal would further strengthen Amazon’s influence and potentially limit competition in the industry.
Following the announcement of the merger’s cancellation, iRobot shares experienced a 14.7% decline in pre-market trading.
The market response reflects investors’ reactions to the unexpected development and the uncertainties surrounding iRobot’s plans.
