At a meeting with European Commission officials on Thursday, the e-commerce behemoth was informed that the transaction would probably be denied, according to sources familiar with the situation. The political leadership of the EU must still formally approve a final decision, which is required by February 14. Meanwhile, Amazon declined to comment on the issue.
On Friday, iRobot’s shares, based in Bedford, Massachusetts, fell as much as 31% to $16.30, expanding the deal spread to over $35, the greatest since the merger was disclosed more than a year ago.
Regulators believe that other vacuum manufacturers may find it more difficult to compete as a result of iRobot's partnership with Amazon, particularly if Amazon decides to give Roomba advantages over competitors on its online store.
There will probably be opposition to the deal in the US as well. People with an insight into the situation claim that the Federal Trade Commission has been preparing a lawsuit to try and stop the transaction. According to persons speaking about an ongoing investigation, the three FTC commissioners have yet to vote on a challenge or hold a final meeting with Amazon to discuss the possible case.
The investigation over Amazon’s acquisition of iRobot was initiated in July 2023 by the European Commission (EC), the EU’s competition watchdog.
The EC has until February 14 to make a decision. The commission's 27 most powerful political members must agree to reject the proposal before the EC can make a final decision.
While iRobot was all set to expand its business in the market of smart home appliances, it witnessed a 40% dip in its shares a few hours after the first reporting of the EU’s intentions in the Wall Street Journal.
Given that the company has been struggling with declining revenues, the acquisition by Amazon was initially viewed as a boon.
In regards to the situation, Matt Schruers, president of tech lobbying group Computer and Communications Industry Association comments that "If the objective is to have more competition in the home robotics sector, this makes no sense[…]Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug."