Amazon has terminated its agreement to acquire iRobot, maker of the popular Roomba robotic vacuum cleaners, for $1.7 billion after facing antitrust scrutiny in the US and Europe. The collapsed deal highlights the increasing challenges Big Tech companies face in pursuing large acquisitions.
The Rise and Fall of the Amazon-iRobot Deal
The deal was first announced in August 2022, with Amazon seeking to leverage iRobot’s home devices to expand its smart home ecosystem. However, the acquisition soon faced skepticism from antitrust regulators on both sides of the Atlantic.
In Europe, investigations found preliminary concerns that the deal would strengthen Amazon’s position in the market for connected devices for homes. Meanwhile in the US, FTC staff reportedly told Amazon last week it planned to file an antitrust lawsuit to block the merger.
Facing daunting legal battles, Amazon and iRobot ultimately decided to terminate the agreement. In a joint press release, the companies said they still believe the deal would have benefited consumers, but decided to abandon it after determining there was “no clear path to obtaining an approval in a reasonable timeframe.”
Mass Layoffs Now Planned at iRobot
With the acquisition deal now dead, iRobot finds itself in an increasingly challenging financial position. The company announced plans for a major restructuring including layoffs of approximately 10% of its workforce, or 140 employees.
Just two days later, iRobot revised the planned layoffs to a much larger 31% of staff, equaling 350 employees. The company is also implementing other cost cutting measures like limiting hiring and reducing media spend.
iRobot CEO Colin Angle stated: “It is an understatement to say that the withdrawal of the Amazon offer is disappointing, but the Board and I remain confident in iRobot’s prospects.” However, with its stock price plummeting over 30%, the failed deal is clearly a major setback for the firm.
What’s Next for Amazon, iRobot and Big Tech Deals
The unraveling of another mega tech acquisition further indicates regulators’ growing skepticism of such mergers. Earlier collapsed deals include Nvidia’s planned purchase of ARM and Microsoft’s attempted acquisition of video game company Activision Blizzard, both of which also faced antitrust opposition.
For Amazon specifically, this marks its second major buyout scrapped in Europe after EU pressure also led it to nix a proposed $575 million acquisition of movie studio MGM.
As for iRobot, analysts say it now faces a difficult path ahead as a standalone company, especially given its recent history of declining revenues. The firm is exploring strategic alternatives but options appear limited.
Meanwhile other tech giants like Apple, Google and Meta will likely tread cautiously on any big M&A plays in the current political climate. However, smaller acquisitions still seem viable as regulators focus scrutiny on just the very largest deals.
The terminated agreement underscores the evolving antitrust landscape with regulators taking a harder line against the immense market power held by Big Tech leaders, especially as they aim to expand into new sectors. Companies at the scale of trillion-dollar giants like Amazon now face high barriers in continuing their acquisition-fueled growth.
| Year | iRobot Quarterly Revenue | Year-Over-Year Change |
|---|---|---|
| 2022 Q3 | $278.19 million | 33% decrease |
| 2022 Q2 | $255.35 million | 30% decrease |
| 2022 Q1 | $291.2 million | 29% decrease |
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