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Amazon terminates iRobot deal, Roomba maker to lay off 31% of staff


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The iRobot headquarters in Bedford, Massachusetts, US, on Friday, June 16, 2023. Inc.’s proposed $1.7 billion deal to buy robot vacuum firm iRobot Corp. was given the all-clear by the UKs antitrust agency. Photographer: Sophie Park/Bloomberg via Getty Images
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AmazoniRobotsaying in a release there was “no path to regulatory approval for the deal.”

The Roomba maker also announced it would lay off 31% of its employees, around 350 people, and that its chair and CEO, Colin Angle, would step down effective immediately.

Shares of iRobot fell 10% in morning trading on the news.

The fate of the deal was plunged into uncertainty after The Wall Street Journal reported that the European Union would not offer regulatory approval.

The European Commission, the executive body of the EU, launched a probe in July, saying that the proposed deal could result in Amazon hindering iRobot rivals from competing on Amazon’s online marketplace. The commission argued that Amazon could delist or reduce rival products’ prominence in search results or elsewhere.

“Our in-depth investigation preliminarily showed that the acquisition of iRobot would have enabled Amazon to foreclose iRobot’s rivals by restricting or degrading access to the Amazon Stores,” Margrethe Vestager, the European Commission’s executive vice president, said in a statement. She added that Amazon’s control over the marketplace “could have restricted competition in the market for robot vacuum cleaners, leading to higher prices, lower quality, and less innovation for consumers.”

“We’re disappointed that Amazon’s acquisition of iRobot could not proceed,” David Zapolsky, senior vice president and general counsel at Amazon, said in a release.

iRobot said it would focus on margin improvements, reduce spending on research and development, and pause all work on “non-floorcare” products, including its air purifiers and robotic lawn mowers.

“The termination of the agreement with Amazon is disappointing, but iRobot now turns toward the future with a focus and commitment to continue building thoughtful robots and intelligent home innovations that make life better,” iRobot’s Angle said in a release.

Amazon will pay iRobot a previously agreed upon $94 million breakup fee. The terminated deal, first announced in 2022, would have originally valued iRobot at roughly $1.7 billion.

The robotic vacuum maker has a market capitalization of under $400 million, following Monday’s news and prior reports that the EU would move to block the deal.

In July, iRobot entered into a $200 million financing facility from the Carlyle Group, in order to fund the company’s operations as a stopgap until the Amazon deal closed.

Amazon declined to provide a comment beyond the release.

Regulators around the world have moved to scrutinize large technology companies, citing potential anti-competitive effects. Amazon is also one of the subjects of a Federal Trade Commission inquiry into the investments and partnerships between Big Tech and artificial intelligence developers such as Anthropic and OpenAI.

In Europe, both Britain’s Competition and Markets Authority and the EU’s European Commission have delayed or halted several deals. Those include Metaacquisition of Giphy, Adobe acquisition of Figma and Microsoft’sin OpenAI, as well as Microsoft’s purchase of Activision Blizzard.

— CNBC’s Annie Palmer contributed reporting.

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