Amazon's $1.4 Billion iRobot Deal Faces Hurdle with EU Antitrust Authorities
Amazon's significant $1.4 billion deal to acquire iRobot, the manufacturer of Roomba, appears to be on the verge of being blocked by European Union antitrust authorities. While this presents a setback for the e-commerce giant, it serves as a stark reminder of the prevailing skepticism among regulators regarding acquisitions by major technology companies.
Sources familiar with the matter reported that officials from the European Commission, the EU's executive body, conveyed to Amazon during a Thursday meeting that the proposed iRobot deal is likely to face rejection. Amazon and the European Commission have chosen not to provide comments on the report.
In response to this development, iRobot shares witnessed a notable decline of 29%, reaching $16.69. This decline positions the stock for its lowest closing since April 2010. Concurrently, Amazon shares experienced a marginal decrease of 0.2%.
Amazon had initially struck a deal to acquire iRobot at $61 per share in August 2022, but the price was later reduced to $51.75 per share. The intended acquisition aimed to expand Amazon's portfolio of smart products, encompassing the Alexa virtual assistant, Ring doorbells, and smart thermostats.
The rejection did not come entirely unexpectedly. In November 2023, the European Commission had initially issued a statement of objections to Amazon, expressing concerns that the proposed deal could restrict competition in the market for robotic vacuum cleaners. Amazon, subsequently, did not propose any remedies.
Regulators have demonstrated a mixed recent record in blocking significant technology deals. Last year, two large deals were successfully completed, signaling a revival in mergers and acquisitions. Microsoft's $69 billion acquisition of Activision Blizzard proceeded despite regulatory challenges from U.S. and U.K. authorities. Similarly, Broadcom's acquisition of VMware concluded after several months of awaiting Chinese approval.
However, in December, Adobe announced the withdrawal of its $20 billion offer to acquire design software company Figma, partly due to objections from European regulators.
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