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iRobot Stock Drops 35% in Premarket After Amazon Deal Likely to Be Blocked
iRobot's shares plunged over 37% in premarket trading after WSJ reported its $1.7 billion acquisition by Amazon is likely to be blocked.
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According to the Wall Street Journal, the European Union’s (EU) antitrust regulator intends to block Amazon’s (NASDAQ: AMZN) $1.7 billion proposal to purchase Roomba maker iRobot (NASDAQ: IRBT). The robot manufacturer’s shares nosedived 37% in premarket trading Friday on the news.
iRobot’s Stock Woes Continue
Shares of iRobot plummeted over 37% in premarket trading Friday on the reports that its acquisition by Amazon is facing a block from EU competition regulators. The stock was down at $15.27 ahead of the market open.
Notably, the Wall Street Journal reported that the EU’s competition watchdog is set to block Amazon’s $1.7 billion bid to acquire iRobot. The report comes a day after European Commission’s competition officials met with Amazon’s representative to discuss the proposal. The e-commerce and cloud giant was informed that the deal would likely be obstructed.
The premarket dip represents the latest in a series of setbacks for iRobot’s stock market performance. The company lost more than 50% of its value over the past six months, with a portion of those declines occurring when the European Commission warned in November that the deal could raise competition concerns.
Amazon’s shares rose slightly higher in the market pre-open. Last year, the company announced a $4 billion investment in AI firm Anthropic.
Amazon-iRobot Deal Overview
Amazon first announced its intention to acquire iRobot in August 2022 at $61 per share in an all-cash transaction.
In July 2023, the EC opened an investigation into the deal, expressing concerns about potential anti-competitive practices. The regulator cautioned that Amazon’s acquisition could impede iRobot’s competitors by limiting their visibility on the online marketplace. The EC argued that this includes the possibility of delisting or reducing the visibility of rival products in search results and other areas.
However, a formal approval from the commission’s 27 top political leaders is still required to reject the deal officially. Typically, this process is unlikely to override a recommendation from the bloc’s competition commissioner, Margrethe Vestager.
The final decision must be reached by February 14, per the commission’s deadline.
Politico recently reported that Amazon does not intend to provide concessions to address the concerns raised by the EC regarding the acquisition. Meanwhile, the U.S. Federal Trade Commission is still reviewing the deal. In June, the U.K.’s Competition and Markets Authority stated that the acquisition would not significantly reduce competition in the U.K.
How far can iRobot’s share price tumble if the deal gets officially blocked? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
