IRobot stock dropped to a 14-year low on Monday after e-commerce giant Amazon.com canceled its planned acquisition of the maker of Roomba robot vacuum cleaners. Meanwhile, Amazon stock rose on the news.
Before the market open, Amazon and iRobot disclosed that they had agreed to terminate the deal, which was announced in August 2022. The companies said they could not see a path to regulatory approval in Europe, which planned to block the transaction. European regulators said Amazon's purchase of iRobot would restrict competition in the market for robot vacuum cleaners.
"We're disappointed that Amazon's acquisition of iRobot could not proceed," David Zapolsky, Amazon senior vice president and general counsel, said in a news release. "This outcome will deny consumers faster innovation and more competitive prices."
The European Union's actions will hurt consumers and competition, Zapolsky said.
IRobot Stock Tanks, Amazon Stock Holds Up
"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," he said.
The EU's review process sets up "undue and disproportionate regulatory hurdles," Zapolsky said.
In the U.S., the Federal Trade Commission also was preparing to block the deal, Reuters reported.
Amazon will pay iRobot a $94 million termination fee.
On the stock market today, iRobot stock sank 8.8% to close at 15.50. Earlier in the session, iRobot stock fell as much as 18.8% to 13.80.
But Amazon stock advanced 1.3% to close at 161.26.
IRobot Announces Restructuring Plan
As iRobot prepares to go it alone, the company announced a restructuring plan to cut costs and streamline its operations.
Bedford, Mass.-based iRobot intends to lay off about 350 employees, or 31% of its workforce.
IRobot also announced a leadership transition. Colin Angle has stepped down as chairman and chief executive officer. Glen Weinstein, iRobot's executive vice president and chief legal officer, will serve as interim CEO. Andrew Miller, lead independent director of the board, is the new chairman.
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