iRobot Stock Plummets as European Commission Raises Concerns over Amazon Acquisition
iRobot's stock experienced a significant decline on Monday following the European Commission's issuance of a "statement of objections" regarding the pending acquisition of the Roomba vacuum cleaner company by Amazon.com.
In August 2022, iRobot (ticker: IRBT) agreed to be acquired by Amazon (AMZN) in a cash deal valued at $61 per share. However, the price was later reduced to $51.75 per share. The completion of the deal was contingent upon obtaining customary regulatory approvals. Last week, there was a surge in iRobot shares after Reuters reported that the acquisition was likely to receive the green light from European regulators.
However, the European Commission - after conducting an in-depth investigation - expressed concerns that the proposed acquisition could potentially hinder competition within the European market for robotic vacuum cleaners. The EC expressed worry over Amazon's potential ability and incentive to impede iRobot's competitors from competing on Amazon's online marketplace.
The EC's announcement indicated that Amazon now has an opportunity to respond to the commission's objections.
iRobot CEO, Colin Angle, issued a statement in response to the EC's finding, expressing his belief that the commission arrived at an erroneous conclusion.
"We are disappointed that the EC has issued a Statement of Objections on the grounds that the proposed merger would restrict competition, considering the intense competition iRobot faces," said Angle. "iRobot continues to engage cooperatively with the EC and other regulatory bodies during their review process. We maintain our optimism and excitement about the potential collaboration with Amazon, which will foster innovation and bring valuable products to customers, ultimately making their lives easier."
Amazon echoed a similar sentiment, stating, "We are currently working closely with the European Commission and are focused on addressing any questions or concerns that have been raised. iRobot, facing tough competition from other vacuum cleaner suppliers, offers practical and inventive products. We strongly believe that Amazon can provide iRobot with the necessary resources to expedite innovation, invest in essential features, and lower prices for consumers."
Following the EC's statement, iRobot's stock declined by nearly 20%, reaching $33.14 on Monday.
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