Amazon cancelled its 1.7 billion USD deal with vacuum maker iRobot due to regulatory authorities planning to block the deal. Worldwide Big Tech is under scrutiny for its transactions.
A termination agreement was signed between the Tech giant and iRobot, resolving outstanding issues related to the transaction agreed upon in August 2022. Amazon agreed to pay iRobot USD 94 million as a termination fee.
Global regulators have been challenging acquisitions by Big Tech. There is a lot of regulatory scrutiny that Amazon has been facing in the US and abroad over its size and practices.
The deal would have added iRobot’s Roomba to Amazon’s product portfolio in devices with Echo and Ring.
The deal could have been Amazon’s 4th biggest acquisition in history. However, Amazon and iRobot felt that regulatory approval for the deal would be difficult.
Regulators in the European Commission and the Executive of the EU were going to block the deal according to an article by Wall Street Journal reported earlier causing a 40% fall in iRobot’s stock price.
The competition authorities of the EU said that the deal concerned them. It could cause restrictions in the robot vacuum cleaner market. They said it might so happen that the online marketplace would make it harder for iRobot’s competitors to sell their wares.
The Commission expected a final decision by 14th February. The deal was also scrutinized by US regulators.
Amazon wanted to meet the FTC senior staff. They were expected to block the transaction. The FTC’s three commissioners were scheduled to be met by Amazon officials for a discussion on the matter. The commission authorizes any potential litigation over the acquisition.
Margaret Verstager the EU competition Chief believed that the deal would cause lower quality, higher prices, and lesser innovation for customers.
FTC and the EU’s competition watchdog were in close contact during the investigation.
Big Tech is under scrutiny for its acquisitions. Adobe’s 20 billion dollar acquisition of Figma was also called off in December as the UK regulator opined that the deal would stifle innovation.
The EU watchdog also expressed concern.
Microsoft’s acquisition of Activision Blizzard ran into trouble with regulators but was ultimately closed.
iRobot is also cutting jobs numbering 350 or 31% of the total workforce. Also, CEO Colin Angle resigned in light of the termination of the deal. Jeff Engle, a turnaround expert was hired by the board as Chief Restructuring Officer. The lead independent Director of the iRobot board, Andrew Miller was appointed Chairman. At the same time, Chief Legal Officer Glen Weinstein will take over as interim CEO while the search for a permanent leader is going on.
Share This Post On
Leave a comment
You need to login to leave a comment. Log-in