Amazon's $1.4 billion attempt to acquire iRobot, the renowned maker of Roomba vacuum cleaners, has been scrapped following objections from European Union (EU) regulators. The EU voiced apprehensions about potential adverse effects on competition in key European markets, including France, Germany, Italy, and Spain.
Unlike Adobe, which recently withdrew its bid for cloud software maker Figma due to regulatory opposition, Amazon chose not to propose remedies to address the EU's concerns. As a result, Amazon is now obligated to pay iRobot a termination fee of $94 million.
The deal, initially announced in August 2022, encountered regulatory challenges during negotiations, leading to a renegotiation of terms in the previous year. Amazon adjusted its per-share offer, reducing it by approximately 15%. The European Commission raised specific concerns about the possibility of Amazon prioritizing its own vacuum cleaners over competitors' products and potentially engaging in anti-competitive practices.
Notably, Amazon is already a major player in the home devices market, manufacturing products such as Alexa and Ring doorbells, the latter acquired through a $1 billion deal in 2018. The EU also underscored potential privacy issues associated with granting Amazon expanded access to user data from their homes.
The cancellation of the iRobot acquisition adds to the series of setbacks faced by major tech companies in their acquisition pursuits. Amazon, despite expressing disappointment, emphasized its belief in the future of consumer robotics in homes and its admiration for iRobot's products.
While the UK's Competition and Markets Authority approved the deal in June, the EU's reservations and the subsequent termination of the acquisition highlight the growing challenges and regulatory scrutiny faced by tech giants looking to expand their market presence through strategic acquisitions. iRobot, amid a post-pandemic sales decline, has experienced about $500 million in net losses since the second quarter of 2021. In response to financial challenges, iRobot previously announced plans to cut approximately 31% of its workforce as part of a broader cost-cutting initiative.