iRobot Tumbles After Amazon Deal Termination, Layoffs, and CEO Exit Announced
Amazon (NASDAQ: AMZN) and iRobot (NASDAQ: IRBT) announced on Monday they would not move forward with the former’s acquisition of the latter, citing “no path to regulatory approval in the European Union.” iRobot also announced that it is laying off 31% of its workforce and the exit of its CEO and chairman.
Amazon to Pay $94M Termination Fee to iRobot
iRobot’s stock tumbled 12% at the market open on Monday following the announcement that its acquisition deal with Amazon is being terminated.
Notably, the e-commerce giant said it would not proceed with the planned takeover due to European regulatory challenges.
“Amazon’s proposed acquisition of iRobot has no path to regulatory approval in the European Union, preventing Amazon and iRobot from moving forward together—a loss for consumers, competition, and innovation.”
– the company wrote in a press release.
Amazon will pay iRobot a $94 million breakup fee as part of the canceled agreement, which initially valued iRobot at around $1.7 billion.
Apart from the deal’s termination, iRobot made two additional major announcements. To be more specific, the consumer robots maker said it will reduce 31% of its workforce, amounting to around 350 employees, as part of its broader restructuring plan.
Furthermore, it also said its CEO, Colin Angle, would step down from his position immediately and would be replaced by the company’s current executive VP and chief legal officer, Glen Weinstein, who will become an interim Chief Executive. Meanwhile, Andrew Miller, formerly lead independent board director, will become chair.
Why Has the EU Prevented the Deal?
Amazon’s plan to acquire iRobot was initially announced in August 2022, when the company offered $61 per share in an all-cash deal that valued the Roomba maker at $1.7 billion.
Roughly a year later, the European Commission (EC), the EU’s top antitrust regulator, launched an in-depth probe into the deal. The watchdog raised concerns that the planned move could harm competition by hindering iRobot’s rivals from competing on Amazon’s online marketplace.
Earlier this month, the EC met with Amazon representatives to discuss the takeover and informed the tech heavyweight that its acquisition would likely be rejected. The regulator was supposed to deliver its final ruling by February 14.
Do you think the deal’s termination could cause long-term troubles for iRobot’s stock? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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