Rather than compromise with EU regulators, Amazon is walking away from a $1.7 billion deal to buy iRobot, sending the Roomba vacuum maker’s stock down roughly 7%.
EU regulators had offered Amazon the chance to make changes in order to remedy its concerns that the deal would be anticompetitive, but the company saw “no path to regulatory approval in the European Union,” as it said on Monday, announcing it was terminating the deal.
EU regulators had argued that the deal would hurt other automated vacuum makers, especially if Amazon gave the Roomba priority on its website. Amazon shot back that the regulations hindering the deal were “undue and disproportionate,” and that it would discourage entrepreneurs. The tech giant will pay iRobot a $94 million termination fee.
“This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” David Zapolsky, Amazon senior vice president and general counsel said in a statement.
iRobot’s stock has been plunging since a 40% drop following a Wall Street Journal report earlier this month, citing people familiar with the matter who said EU competition regulators had informed Amazon they would block the deal. Following the Monday announcement, iRobot’s shares are down 60% year-to-date.
Colin Angle, iRobot’s founder, CEO and chairman, also stepped down Monday as the company prepared to lay off 350 people, or about 31% of its workforce. Its executive vice president and chief legal officer Glen Weinstein will serve as interim CEO.
Although the company had been profitable every year since it went public in 2005, it started posting losses every quarter since the fourth quarter of 2021, racking up more than $550 million in cumulative losses since then. The company was forced to take on $200 million in additional debt last year, which cut the value of the overall deal by 15%.
Angle said that news of the merger falling through was “disappointing,” but that the company would bounce back.
Angle said in a statement that “iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better, and that our customers around the world love.”