Don’t cancel without consequences
Amazon puts iRobot takeover on hold
January 29, 2024, 5:08 p.m
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The deal is history: Amazon no longer wants to take over the robot vacuum manufacturer iRobot after resistance from competition authorities. The cancellation has immediate consequences for the robot specialist. Amazon costs them dearly.
After resistance from competition watchdogs, Amazon is abandoning its plans to buy the robot vacuum manufacturer iRobot. The EU Commission saw the danger that Amazon could hinder iRobot’s rivals on its trading platform. For the robot specialist, the cancellation of the deal has immediate consequences: with 350 employees, almost a third of the workforce has to go. Longtime boss Colin Angle is retiring. When announced in August 2022, the acquisition was valued at $1.7 billion. The price was later reduced to around $1.4 billion after iRobot secured a new credit facility.
The provider is entitled to a payment of more than $90 million from Amazon for canceling the purchase. Amazon and iRobot were disappointed. By abandoning the takeover, consumers would miss out on faster innovations and better prices, criticized Amazon manager David Zapolsky.
According to the financial service Bloomberg, it wasn’t just EU competition watchdogs that had objections. Senior employees of the US Federal Trade Commission (FTC) informed Amazon last week that they would recommend a lawsuit against the purchase of iRobot, Bloomberg reported.
By purchasing the industry pioneer, Amazon wanted to expand its role in the connected home. iRobot is best known for its self-propelled vacuum cleaners under the brand name Roomba. Newer models use cameras to create a 3D scan of the household and, thanks to artificial intelligence, can avoid cables or dog feces lying on the floor, for example. The US company was a pioneer in robot vacuum cleaners. There are now devices of this type from many providers. The iRobot share was down a good ten percent in early US trading. Amazon’s share price was virtually unchanged.