Amazon terminates iRobot deal, sees 'no path' to EU approval
Amazon (AMZN) is ending its bid to acquire Roomba-maker iRobot (IRBT). The companies say they see "no path to regulatory approval in the European Union." As a result of the deal being canceled, iRobot has announced it is cutting 350 jobs, about 31% of its workforce, and that Chairman and CEO Colin Angle will be stepping down.
Yahoo Finance Live reports the breaking details.
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Editor's note: This article was written by Stephanie Mikulich
Video Transcript
- All right, well shares of iRobot sinking in premarket trading as Amazon announces that it will not move forward with its acquisition of the vacuum maker. Now they are saying that they see no path for regulatory approval. More bad news here, iRobot. Take a look at those shares, off about 19% ahead of the open. And also, the fact that it is cutting 31% of its staff as its chair and CEO, saying that he will step down immediately.
Lots to unpack here, but Brad, let's first start with the Amazon angle of this because the fact that they are abandoning this $1.4 billion acquisition coming after the deal was pressured from the EU. But I think more so just what this signals more broadly in terms of Amazon needing to defend the fact that it's not a monopoly, that it should be able to get approval for these sort of deals and what this could mean for other M&A activity beyond Amazon but talking about some of those other larger tech names, which has been under pressure now, not only in the EU but also here in the US with the FTC.
- Right, and an uncertain future now here for iRobot, especially with some of the restructuring plans that the company has announced as well on the back of it, undertaking the operational restructuring plan, trying to align cost structure with near term revenue expectations, and to drive profitability is what they say. They're reducing some of their research and development expenses by approximately $20 million year over year. They're also looking to have some margin improvements in generation of approximately $80 to $100 million in savings, not necessarily money that they're going to see just flow in terms of profits.
And so that brings you to the larger question as of what their profit base will actually look like, and then you mentioned the restructuring impacting the employees here, 350 employees, 31% of the company's workforce as of December 2023. A lot of those notifications are going to be taking place unfortunately by the end of March.
- Yeah, certainly, so it's going to likely be under pressure a little bit. And then just going back also just in terms of Amazon, the fact that it needs to prove that some of its actions is not stifling competition elsewhere, that's going to remain a topic here as you look forward to what these big tech giants are going to look like here in several years.
- Absolutely.
