Shares of
iRobot
were sinking Monday after the smart vacuum company and
Amazon.com
announced the termination of their merger agreement as regulatory approvals hit a wall.
The news followed a report last week from The Wall Street Journal that said officials from the European Commission told
Amazon
at a meeting that the $1.4 billion deal with
iRobot
was likely to be rejected. Regulators have pushed back against the acquisition, stating that the deal would restrict competition in the market for robotic vacuum cleaners.
“Amazon’s proposed acquisition of
iRobot
has no path to regulatory approval in the European Union, preventing Amazon and iRobot from moving forward together—a loss for consumers, competition, and innovation,” the companies said in a statement.
Earlier this month, Amazon missed a deadline to file remedies to the European Commission regarding the regulatory body’s objections to the merger. If the acquisition was not terminated, the European Commission had until Feb. 14 to make a final decision on the deal.
IRobot also announced a restructuring plan on Monday that included the reduction of 31% of its staff in order to ”position the company for stabilization in the current market.” iRobot expects to record restructuring charges of between $12 million and $13 million, primarily for severance and related costs, over the first two quarters of 2024.
The new restructuring plan also includes the departure of Chairman and Chief Executive Colin Angle.
“The Board and I believe that iRobot can—and will—grow its presence and continue to build a cutting-edge suite of robotic floorcare solutions that help consumers make their homes easier to maintain and healthier places to live,” said Andrew Miller, the lead independent director of the board who was appointed chairman. “To do this successfully, however, we must rapidly align our operating model and cost structure to our future as a standalone company.”
Shares of iRobot were tumbling 13% to $14.79 and were on track for their lowest close since April 2010, according to Dow Jones Market Data. Amazon shares were up 0.2% to $159.47.
More details on the termination of this deal may be provided when the companies report their respective financial results over the coming days. Amazon is scheduled to report fourth-quarter earnings on Feb. 1, while iRobot is scheduled to post year-end results on Feb. 7.
Write to Angela Palumbo at [email protected]
Read the full article here