Amazon abandons plans to buy Roomba maker iRobot

A robot vacuum with mopping arm deployed. The arm is a circular section of the top case of the Roomba with a mop pad on the underside. It presses against the floor when in use.

a:hover]:text-gray-63 [&>a:hover]:shadow-underline-black dark:[&>a:hover]:text-gray-bd dark:[&>a:hover]:shadow-underline-gray [&>a]:shadow-underline-gray-63 dark:[&>a]:text-gray-bd dark:[&>a]:shadow-underline-gray”>Photo by Jennifer Pattison Tuohy / The Verge

Amazon’s deal to buy Roomba maker iRobot is off, the companies announced today, after iRobot said the deal has “no path to regulatory approval in the European Union.” iRobot is also announcing that it’s laying off around 350 employees, or around 31 percent of its workforce as part of a restructuring. It expects to notify the majority of affected employees by the end of March.

As part of the announcement, iRobot chair and CEO Colin Angle, who co-founded the company in 1990, is stepping down. iRobot’s current executive vice president and chief legal officer, Glen Weinstein, will serve as interim CEO, and Andrew Miller, formerly lead independent director of the board, will become chair. iRobot says it hopes to return to profitability by focusing on its “most profitable customers, geographies, and channels” including direct-to-consumer sales.

The collapse of the deal means Amazon will pay a $94 million termination fee to iRobot, which will largely be used to pay off a $200 million loan it took out last year. As part of today’s announcement, iRobot published its preliminary fourth quarter results for 2023 and said it expects to report a GAAP operating loss of “between $265 and $285 million.”

The announcement comes after the $1.4 billion acquisition ran into difficulties with EU regulators. Last November, the European Commission said it believed the deal had the potential to restrict competition in the robot vacuum cleaner market. Many of iRobot’s competitors also sell their devices on Amazon’s online store, and regulators were concerned that Amazon could delist or reduce the visibility of rival robot vacuum cleaners, restricting competition and “leading to higher prices, lower quality, and less innovation for consumers.”

Amazon had until January 10th to try to convince the European Commission to let the deal go through, but Politico reported that the deadline passed without Amazon offering any concessions. The companies first announced the deal in August 2022 and received the go-ahead from the UK’s competition regulator in June 2023.

In a statement, Amazon SVP and general counsel David Zapolsky said he was “disappointed” that the deal couldn’t proceed. “This outcome will deny consumers faster innovation and more competitive prices, which we’re confident would have made their lives easier and more enjoyable,” Zapolsky said. “Mergers and acquisitions like this help companies like iRobot better compete in the global marketplace, particularly against companies, and from countries, that aren’t subject to the same regulatory requirements in fast-moving technology segments like robotics. Undue and disproportionate regulatory hurdles discourage entrepreneurs, who should be able to see acquisition as one path to success, and that hurts both consumers and competition.”

The deal is one of several major tech acquisitions to have fallen apart in recent years as global regulators ramp up scrutiny. Adobe walked away from its $20 billion deal to buy Figma late last year in the face of pressure from UK and EU regulators, Nvidia formally abandoned its $40 billion Arm deal, citing “significant regulatory challenges” in early 2022, and even Meta was unable to buy Giphy. Microsoft was able to push its deal to buy Activision Blizzard through, but only after first granting concessions to the UK and EU authorities.

In the past, Amazon has been able to make smart home acquisitions with less difficulty. It acquired camera and doorbell company Blink in 2017, home security company Ring in 2018, and mesh router company Eero in 2019. Since then, Amazon has maintained the individual brand names of the companies and has continued to sell competing devices via its online store.

In the time since announcing its plans to buy iRobot, Amazon’s devices and services business has gained a new boss. When the deal was first announced, Dave Limp was still serving as Amazon hardware’s top executive. But as of the end of October 2023, Limp had been replaced by Panos Panay, who moved into the role from Microsoft, while Limp has transitioned to CEO of Jeff Bezos’ aerospace company, Blue Origin.

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