Amazon Inc. and iRobot Corporation's acquisition deal has hit another hurdle after it was reported that the European Union's competition regulator intends to block it.
According to sources who are familiar with the matter, the e-commerce giant's $1.4 billion buyout plans to acquire the Bedford, Massachusetts-headquartered robotics and technology company may fail due to the latest development in the acquisition process.
Reuters reported that during a recent meeting with EU officials, Amazon was told that the deal may not get approval, which it needs to close the transaction. The officials said the merger is more likely to be declined.
Possible Reason for the Rejection
Based on the reports, Amazon did not offer countermeasures to tackle the antitrust watchdog's concerns that the deal could limit competition in the robot vacuum cleaner market. The company was given until Jan. 10 to submit its remedy proposal, but there was none.
"If the objective is to have more competition in the home robotics sector, this makes no sense," Computer and Communications Industry Association's president, Matt Schruers, said about the latest development in Amazon's deal. "Blocking this deal may well leave consumers with fewer options, and regulators cannot sweep that fact under the rug."
iRobot Shares Dropped After News of EU's Stance on Its Merger With Amazon
Shares of iRobot plummeted by more than 33% in extended trading on Thursday. CNBC reported that the considerable drop came after the EU antitrust regulator's plan to block Amazon from acquiring the manufacturer of the Roomba vacuum cleaner was reported.
On the other hand, Amazon's stock also dipped in the extended trading but only slightly. Meanwhile, it was in August 2022 when Amazon first announced that it would buy iRobot at $61 per share, equivalent to a total of $1.7 billion. The company said it has agreed to an all-cash deal with iRobot.
Photo by: Amazon Press Room